9911796707
TMI Blog2025 (4) TMI 1001X X X X Extracts X X X X X X X X Extracts X X X X ..... r the MGST Act. Further hereinafter, for the purposes of this Advance Ruling, the expression 'GST Act' would mean CGST Act and MGST Act. 1. FACTS AND CONTENTION - AS PER THE APPLICANT 1.1 The Applicant is engaged in manufacturing and supplying products for water conservation and other water preserving products which are pre-dominantly used for agricultural sector. 1.2 The present Application pertains to 'Geo-Membrane for Water Proof Lining-Type-II as per IS:153151:2015' manufactured by the Applicant and which is used for water proof lining of ponds, canals and other after storage places. 1.3 The aforesaid product is also referred to as Pond Liner and are specific Laminated High-Density Polyethylene ('HDPE' for short) Woven Geo-Membrane for water proof lining which is manufactured pacifically as per the Indian Standard prescribed under IS: 15351:2015 and used primarily for farming water and as liners for water ponds, canals, water pits etc. for storage of water bodies. 1.4 The raw materials used for manufacture of the said product are DPE Plastic Granules, 30 Black Coloured Master Batch, HDPE Tape, HDPE fabric, LDPE Plastic Granules, LLDPE Plastic Granules, Black coloured Carbo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a Kind Used for Technical Purposes'. 2.2 The Applicant submits that the aforesaid products is being manufactured as per IS specification as 'Laminated High Density Poly Ethylene HDPE Woven Geomembrane for Water Proof Lining Type-II, IS; 1531:2015' and it is known in the market as agro textiles and are covered in the family of Geomembrane used for water proof lining. The said laminated HDPE Woven Geomembrane is a textile fabric used exclusively for the technical purpose of water proof lining. 2.3 The Applicant refers to the Notification No. 54/2015-2020 dated 15.01.2019 issued by the Directorate General of Foreign Trade, Department of Commerce, Ministry of Commerce and Industry, GOI, as per the power conferred under Section 5 of the FT (D&R) Act, 1992 read with Para 1.02 and 2.01 of the FTP, 2015-2020, wherein a list of 207 items had been incorporated list of 207 items as technical textiles. The product in question is recognized by DGFT as Technical Textiles. The Applicant craves leave to produce, rely upon and refer to the said Notification dated 15.01.2019 during the course of personal hearing. 2.4 The Applicant further refers to a Publication made by the Ministry of Textile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covered under Chapter Heading 5404 90 20 inasmuch as Section XI covers Textiles & Textile Articles and the aforesaid Notie 1 (g) excludes only strips of plastic where the width is exceeding 5mm. The explanatory Notes to the HSN also categorically state that HDPE Tapes and strips less than 5mm are covered under the Heading 5404. 2.10 Further, the aforesaid HDPE Tapes less than 5mm are woven into HDPE fabrics and are covered under Heading 5407. The said Woven HDPE Fabric is subjected to lamination coating with LDPE film on sides and sandwich lamination, wherever required, and brings into existence a new product namely Geomembrane Pond Linings. The said Geomembrane Pond Linings are supplied in piece form or are cut to length as per the specification of the customer and is correctly classifiable under Chapter Heading 5911. 2.11 The Applicant submits that on a perusal of Chapter Not 7 of the Chapter 59 of the HSN which provides the scope of Textile Fabrics as also the Chapter Heading 5911 itself, it emerges that Laminated High Density Poly Ethylene HDPE Woven Geomembrane for water proof lining - ISL 15351:2015 are made from HDPE Tapes / Strips of Less than 5mm which are specifically ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion pertains to the product 'Geomembrane for Water Proof Lining-Type-I as per IS:153151:2015', which is used for water proof lining of ponds, canals and other water storage either whether classified under HSN-39269099 or under HSN-59111000. 3.3 The manufacturing process as mentioned at Para 15 (3) of the application, the disputed product is also referred to as Pond Liner and are specific Laminated High Density Polyethylene ('HDPE' for short) Woven Geo-Membrane for water proof lining which is manufactured specifically as per the Indian Standard prescribed under IS:15351:2015 and as per Para 15 (4) of the application, the main raw materials used for manufacture of the said product are HDPE Plastic Granules, Black Coloured Master Batch, HDPE Tape, HDPE Fabric, LDPE Plastic Granules, LLDPE Plastic Granules, Black Coloured Carbon Master Batch, UV Granules and Printing Film. 3.4 The High-Density PolyEthylene (HDPE) is thermoplastic polymer produced from the monomer ethylene. The HDPE is made under controlled conditions by applying intense heat to petroleum products. The HDPE is mainly used to manufacture plastics goods and articles thereof falling under chapter/HSN-39. Further, the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f these products under any of the aforementioned headings; as the heading/HSN 3926 reads as 'Other articles of plastics and articles of other materials of headings 3901 to 3914'. It implies that articles of plastics or articles of other materials are not covered in any of the headings from 3901 to 3925, would be covered under heading/HSN 3926 which is a residual entry. The HSN 3926 covers articles, not elsewhere specified or included, of plastics or of other materials of headings 39.01 to 39.14. However, the product namely "Geo Membrane for Waterproof Lining fabrics (also referred to as Pond Liner) would invariably be covered under heading 3926. 3.8 Now, in order to find out the tax liability of the products in dispute, it is submitted that the classification of the product namely "Geo Membrane for Waterproof Lining fabrics" earlier was covered under Entry No.45 of Schedule-IV of Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017 (upto 14.11.2017) which read as "Other articles of plastics and articles of other materials of headings 3901 to 3914 [other than bangles of plastic, PVC Belt Conveyor, plastic beads and plastic tarpaulins] and during this period i.e. upto 14.11. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicant i.e. 'Geomembrane for Water Proof Lining-Type-II as per IS:153151:2015' is classifiable under Chapter 39 or Chapter 59 of the GST Tariff. In order to decide the classification of the said product, it is imperative to understand the manufacturing process and use of the said product. The applicant has submitted detailed manufacturing process of the product manufactured by them. We find that the first stage of manufacturing is the 'Tape Extrusion Process' wherein HDPE Granules with UV Stabilized property, with appropriate carbon black admixture are extruded through sheet die to produce solid sheet which is further uniformly slit into number of tapes, which are then passed through hot air oven for twist stretching with proper orientation to the tapes to achieve the required tape width and desired strength. The width of the tape is between 2.1mm to 3.7mm. HDPE Tapes / Strips are then wound on bobbins for further processing. The second stage of the manufacturing process is the 'Fabric Weaving Stage' where the said HDPE Tapes/ Strips of width less than 5mm are taken to circular looms and are woven into HDPE Woven Fabrics. The said High Density UV Stabilized Woven Fabrics are manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the Customs Tariff Act, 1975 (51 of 1975). The rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this notification. We will therefore, be required to refer to the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) in order to find out the correct classification of the said products. Further, since the applicant in his question seeking Advance Ruling wants to know whether their product falls under Chapter Heading 39269090 or 59119090, we find it imperative to refer to the said headings also. 5.5 Chapter 5911 and Chapter 39 of the Customs Tariff and the relevant Section Notes and Chapter Notes as enumerated hereinbelow: - 5.5.1 Chapter 5911:- Textile products and articles, for technical uses, specified in Note 7 to this Chapter; such as Textile fabrics, felt and felt-lined woven fabrics, coated, covered or laminated with rubber, leather or other material, of a kind used for card clothing, and similar fabrics of a kind used for other technical purposes, including narrow fabr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and felts, endless or fitted with linking devices, of a kind used in paper making or similar machines (for example, for pulp or asbestos-cement), gaskets, washers, polishing discs and other machinery parts). 5.5.4 The HSN Explanatory notes also states that the Chapter Heading 5911 covers textile fabrics, felt and felt lined woven fabrics, coated, covered or laminated with rubber, leather or other materials (eg. Plastics), of a kind used for card clothing, and similar fabrics of a kind used for other technical purposes, including narrow fabrics made of velvet impregnated with rubber, for covering weaving spindles (weaving beams). Thus, textile fabrics, coated, covered or laminated with plastics are also covered under Chapter Heading 5911. 5.5.5 Chapter 3926: Other articles of plastics and articles of other materials of Heading 3901 to 3914 (other than bangles of plastics, plastic beads and feeding bottles) 5.5.6 Chapter Note 1 to Chapter 39 reads as under :- * Throughout this schedule, the expression "Plastics' means those material of Heading 3901 to 3914 which are or have been capable, either at the movement of polymerization or at some subsequent stage, of being formed under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Strips and the like, of synthetic textile materials. The strips of this heading are flat, of a width not exceeding 5mm, either produced as such by extrusion or cut from wider strips of from sheets." The relevant portion of the explanatory notes for Chapter 5407 reads as under: - "5407.20 Woven fabrics obtained from strips or like" "This heading covers woven fabrics (as described in Part (I)(C) of the General Explanatory Note to Section XI) made of synthetic filament yarn or monofilament or strip of heading 5404" 5.6.4 Heading 5407 reads as under: - "5407- Woven fabrics of synthetic Filament Yarn, including woven fabrics obtained from materials of Heading 5404" "5407 20- Woven fabrics obtained from strip or the like" 5.7 From the manufacturing process as detailed here-in-above and on perusal of the tariff headings, it is clear that the strips of plastic, of less than 5 mm width would be appropriately classifiable under Tariff Heading 5404 and the fabric woven out of the said strips would be appropriately classifiable under Tariff Heading 5407 20. Such fabrics would also be considered as a textile fabric. In this regard, we find that the Apex Court in the case of M/s. Porri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... weak or strong, light or heavy, bleached or dyed, according to the requirement of the purchaser. The use to which it may be put is also immaterial and does not bear on its character as a textile. It mat be used for making wearing apparel, or it may be used as a covering or bedsheet or it may be used as tapestry or upholstery or as duster for cleaning or as towel for drying the body. A textile may have diverse uses and it is not the use which determines its character as textile. It is, therefore, no argument against the assessee that 'dryer felts' are used only as absorbents of moisture in the process of manufacture in a paper manufacturing unit. That cannot militate against 'dryer felts' falling within the category of 'textiles', if otherwise they satisfy the description of 'textiles'." Thus, prima facie, it appears that the fabrics woven out of the HDPE tapes and strips of less than 5mm width, are textile fabrics. 5.8 These textile fabrics are then subjected to lamination, as mentioned by the applicant, where the HDPE Woven Fabrics are laminated on both sides, along with sandwich lamination, wherever required, with the suitable combination of specific thickness L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Annexure III to the Notification, at Sr. No. 1, Geo Textiles, including geomembranes are listed under the category of technical textile products. Further, we find that the product geomembrane is manufactured as per the standards laid down under IS : 153151 : 2015 and are used primarily for farming water and as liners for water ponds, canals, water pits etc., for storage of water bodies. The process of manufacture provides the essential character of abrasion resistance, high impermeability, extremely high puncture ad tear resistance, long UV stability etc. As per the Bureau of Indian Standards, the said standard 15351 : 2015 relates to Agro Textiles-Laminated High Density Poyethylene woven geo membrane for water proof lining and is classified under the Group of Textile, textile products and machinery and sub grouped under Textile for special use. This again highlights the fact that the product has been manufactured meeting certain standards which render the product capable of being used for a special purpose and hence it can be safely concluded that said product is manufactured for a specific use and can be termed as a textile fabric for technical use. We also find that the use of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge of a residuary entry as other articles of plastic under Chapter 3926. 5.12 We find that the concerned officer has relied upon the decision of the Advance Ruling Authority, Gujarat in the case of M/s. Ananta Synthetics Innovations, Ahmedabad decided vide Advance Ruling No. GUJ/GAAR/R/107/2020 dated 30.12.2020. We find that a Writ Petition was filed by the applicant against the decision of the AAR in the said case before the Hon'ble Gujarat High Court. The Hon'ble Gujarat High Court vide its order dated 11.7.2024 reported in (2024) 165 Taxmann.com 130 (Gujarat) has set aside the aforesaid order of the AAR and has categorically held in para 23 of the Order that Geo Membrane is classifiable under Chapter 59 and not under Chapter 39. The Hon'ble High Court relied upon the decision of the Gujarat High Court in the case of CTM Technical Textiles Ltd., which had distinguished the decision of the Hon'ble Madhya Pradesh High Court in the case of M/s. Raj Packwell Ltd., reported in 1990 (50) ELT 201 (MP) on the ground that the said decision was not in relation to the fabrics woven out of HDPE Tapes but was in relation to the classification of sacks/strips/tapes. The Hon'ble Court held tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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