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TMI Blog2023 (11) TMI 666X X X X Extracts X X X X X X X X Extracts X X X X ..... e and circumstances of the case may require;" 2. The first petitioner, which is an association of technical textiles manufacturers and the second petitioner which is a member of the said association, are principally aggrieved by the Circular dated 31 December 2018 issued by the Tax Research Unit [TRU] constituted under the first respondent, and to the extent that it purports to clarify that polypropylene woven and non-woven bags including those laminated with Biaxially Oriented Polypropylene [BOPP] are liable to be classified as falling under Chapter 39 and more particularly Tariff Heading 3923 forming part of the First Schedule to the Customs Tariff Act, 1975 [CTA]. The dispute essentially related to a question of classification of polypropylene woven and non-woven bags under the Harmonized System of Nomenclature [HSN]. 3. The TRU has, on due consideration of the aforesaid issue, clarified that those articles would be classifiable as 'plastic bags' under Tariff Heading 3923. The petitioners are aggrieved by the aforesaid Circular, since it contends that polypropylene woven or nonwoven bags are made out of textiles and thus cannot be equated with plastics, which form the subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t learned counsels for the respondents could not draw our attention to any provision of the CGST Act, in terms of which the TRU could be said to have been clothed with the authority or jurisdiction to render a clarification with respect to classification of goods and articles. That power clearly appears to stand conferred upon the Board exclusively. We are thus of the considered opinion that no authority vested in the TRU to issue the clarification impugned before us. 8. While this would have been sufficient to dispose of the writ petition on this short ground alone, we proceed further in light of the detailed submissions which were addressed by respective counsels and related to the classification of the article itself. 9. Mr. Lakshmikumaran drew our attention to the title of Chapter 39 of the First Schedule to the 1975 Act and which deals with "Plastics and Articles Thereof". Learned counsel laid emphasis on Notes 1 and 2 thereof and which purports to exclude textile materials which would otherwise fall within the ambit of Section XI of the First Schedule to the 1975 Act. Notes 1 and 2 of the said Chapter are extracted hereinbelow:- "CHAPTER 39 Plastics and Articles Thereof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ample, clock or watch cases); (w) articles of Chapter 92 (for example, musical instruments or parts thereof); (x) articles of Chapter 94 (for example, furniture, lamps and lighting fittings, illuminated signs, prefabricated buildings); (y) articles of Chapter 95 (for example, toys, games, sports requisites); or (z) articles of Chapter 96 (for example, brushes, buttons, slide fasteners, combs, mouth--pieces or stems for smoking pipes, cigarette holders or the like, parts of vacuum flasks or the like, pens, propelling pencils, and monopods, bipods, tripods and similar articles." 10. It would thus appear that while Tariff Heading 3923 speaks of articles for the conveyance or packing of goods, it would essentially extend to articles made of plastics and read holistically exclude textiles completely therefrom. Tariff Heading 3923 is reproduced hereinbelow:- "3923 Articles for the conveyance or packing of goods, of plastics; stoppers, lids, caps and other closures, of plastics 3923 10 - Boxes, cases, crates and similar articles: 3923 10 10 --- Plastic containers for audio or video cassettes, cassette ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Other : 5603 91 00 -- Weighing not more than 25 g/m2 kg. 10% - 5603 92 00 -- Weighing more than 25 g/m2 but not more than 70 g/m2 kg. 20% 5603 93 -- Weighing more than 70 g/m2 but not more than 150 g/m2 5603 93 10 --- Mulch Mats, conforming to IS 17355 kg. 10% - 5603 93 90 --- Other kg. 10% - 5603 94 --- Weighing more than 150 g/m2 5603 94 10 --- Non-woven Geotextile and articles thereof, Conforming to IS 16391, IS 16392 kg. 20% - 5603 94 20 --- Mulch Mats, conforming to IS 17355 kg. 20% - 5603 94 90 --- Other kg. 20% -" 12. Our attention was also drawn to Note 3 comprised in Chapter 56 of the First Schedule to the 1975 Act, which reads as under:- "CHAPTER 56 Wadding, Felt and Nonwovens; Special Yarns; Twine, Cordage, Ropes and Cables and Articles Thereof. NOTES xxx xxx xxx 3. Headings 5602 and 5603 cover respectively felt and nonwovens impregnated, coated, covered or laminated with plastics or rubber whatever the nature of these materials (compact or cellular). Heading 5603 also includes n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y for Advance Rulings [AAR] in the following cases had also held that polypropylene bags are liable to be placed under Tariff Heading 6305: (a) In the matter of U.S Polytech 2019 SCC Online WB AAAR-GST 18; (b) In the matter of JJ Fabrics 2018 SCC Online Ker AAR-GST 2018 SCC Online Ker AAR-GST 9; (c) In the matter of SMVD Polypack Pvt. Ltd 2018 SCC Online Ker AAR-GST 9; (d) In the matter of Kanniwadi Nagarajan Sharmila 2018 SCC Online TN AAR-GST 22. 15. According to Mr. Lakshmikumaran, although certain decisions rendered by the AAR have taken a contrary view, the conflict in opinions so rendered could not have been resolved or laid to rest by the issuance of a circular and that too by a body, which has not been statutorily conferred that power. 16. Mr. Lakshmikumaran also sought to distinguish the decision of the Madhya Pradesh High Court in Raj Pack Well Ltd v. Union of India 1989 SCC Online MP 377, a decision which was cited by the respondents, contending that undisputedly the product which formed the subject matter of that judgment related to HDPE strips and tapes of a width not exceeding 5 mm. According to learned counsel for the petitioners, Raj Pack Well neither cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e expression "plastic bags"? It is an admitted position that the non-woven bags, which form the subject matter of this writ petition, comprise of 98.3% polypropylene. Consequently, it would not be wrong to say that the non-woven bags in question are essentially non-woven polypropylene bags. The definition of polypropylene given in the New Lexicon Webster's Dictionary makes it clear that propylene is a plastic and is used to make moulded objects in various forms. These forms include plates, fibres, films, ropes and toys. Polypropylene fibres are used for the manufacture of these non-woven bags. Polypropylene film is used for making plastic bags as they are normally understood. Whether it is polypropylene fibre or it is polypropylene film, the end product made out of it would remain to be plastic, provided the end product predominantly contains polypropylene, whether fibre or film. In the present case, the admitted position is that the nonwoven bags comprise of 98.3% polypropylene. Therefore, the conclusion is simple that the end product is nothing but plastic. Since the products manufactured by the petitioner are admittedly bags, they would fall within the expression "plastic ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gard, we must not overlook the consequences of reading the word may in the letter dated 05.09.2017 as casting a mandatory duty. This would bring us to frontally face the question of how the purchaser would go about implementing such a direction. Sections 96 to 103 of the Central Act, as also of the State GST Act do provide for the mechanism of advance ruling. If the purchaser is to include the HSN Code, there must be a mechanism to give effect to what is directed by the High Court, viz., "to clarify the issue with the GST Authorities relating to the applicability of the correct HSN Code of the product and thereafter mention in the NIT". To describe this as impractical and the direction given being without bearing in mind the conspectus of the statutory provisions of the GST Acts, cannot but be correct. Under the provisions relating to advance ruling, while it is true that the question which can become the subject matter of advance ruling includes questions relating to classification of goods and services, there is a detailed procedure provided in the matter. The matter does not rest with the decision of the original Authority. A right of appeal is provided. The matter may travel to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant that the Circular cannot bind the supplier and the Circular can be challenged in an appropriate proceeding. Appellants contend that it does not represent a final view, and does not bind the court and a circular which is in the teeth of the statute can have no existence in law. In this regard our attention is drawn to the judgment of this Court in (2008) 13 SCC 1. It is further contended that the circular cannot bind the appellants who are only purchasers of the product. There is no duty cast on the Board under the Central Act or on the Commissioner under the State Act to issue any clarification, as directed in the impugned Judgment. There is no duty cast on the appellants to seek such direction. Therefore, the appellants are right in contending that there is no statutory duty, which could have been enforced in the manner done in the impugned Judgment. There is no public duty which is enforceable." All that needs to be observed in this regard is that the conflict of opinion that may exist would have to be resolved by parties taking appropriate steps as contemplated under the CGST Act. 26. We further note that the impugned circular while purporting to convey a position with res ..... X X X X Extracts X X X X X X X X Extracts X X X X
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