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TMI Blog2025 (4) TMI 1048X X X X Extracts X X X X X X X X Extracts X X X X ..... also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth 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 Lamifabs & Papers (P) Ltd established the manufacturing tarpaulin in 1986 in the historical city of Aurangabad. We are one of the prominent manufacturers, suppliers and exporters of HDPE Tetraa Vermi Bed, HDPE Tarpaulins, HDPE Waterproof Covering, HDPE Wide Width Fabric, HDPE Pond liner, HDPE Flexible Irrigation Pipe, HDPE Azolla Pond & Fumigation Cover. We are holding Indian Patent for TETRAA VERMI BED (Patent No. 255578) and also ISI marked-HDPE Tarpaulin & HDPE Vermibed. Our inherent strength is consistent quality with complete set up of modern machines including one of the best in-house testing laboratories for these products India. In our efforts to develop an eco-friendly products range, using our advance R & D facility, we have developed a new unique product under the * Fabricated Size: 3600 mm x 1200 mm x 600mm approx. (12' x 4' x 2'.) * Made from High Density Polyethylene (HDPE) Woven fabric. * Made from High Density Po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, 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 fabrics made of velvet impregnated with rubber, for converting weaving spindles (weaving beams); Bolting cloth whether or not made up; felt for cotton textile industries, woven; woven textiles felt whether or not impregnated or coated, of a kind commonly used in other machines, cotton fabrics and articles used in machinery and plant, jute fabrics and articles used in machinery or plant, textile fabrics of metalized yarn of a kind or the like including that of human hair paper makers felt woven gaskets washers polishing discs and other machinery parts of textile article GST RATE IS 12%. Applicant filed additional Submission dated 09.01.2025 With reference to the application form for Advance Ruling in GST-ARA-01 AD270322069328Z DATED 26.03.2022 they submitted that they are seeking advance ruling GEO-MEMBRANE (Pond Liner). 2.3. The applicant is engaged in manufacturing and supplying products for Water ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (HDPE Tape sending for weaving to loom for fabric) ↓ Manufacturing HDPE fabric on looms with using HDPE Tape (HDPE FABRIC SENDING FOR LAMINATION OF LAMINATION COATING PLANT) ↓ Coating Lamination plant with LDPE Raw-material Lamination with printing of ISI mark company details on HDPE fabric (with using HDPE Fabric+ LDPE Plastic Granules+ LLDPE plastics granules black colour master batch+ UV granules) ↓ Sandwich Lamination (With using two layers of HDPE laminated fabric + LDPE Plastics granules LLPDE Plastics Granules + Black colour Master batch + UV) (Final layer HDPE Laminated Geo-membrane fabric sending to sealing plant for jointing & size, as per costumers requirement) ↓ Sealing Plant Jointing & Size Making as per Customers Requirement with packing (With using Final 5 Layer HDPE Laminated Geo-membrane Fabric) 2.15. The applicant is currently classifying 'Geo-Membrane for Water Proof Lining-Type-II as per IS: 15351:2015' under Chapter Heading 3926 90 99. And paying GST @18% However, by this Application, they are seeking classification of the same under Chapter Heading 5911 10 00.@12% GST. 2.16. The Applicant submitted that Chapter Heading 5911 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vered under Heading 3901 to 3914. Further, from a bare reading of the Chapter Note 1 to Chapter 39, which defines the scope of the term 'Plastic', it clearly comes out that HDPE Tapes and Fabrics are excluded from its scope and covered under the Section XI of the Tariff Act. 2.22. Further, the Applicant submitted that Note 1(g) to Section XI of the Tariff Act states that the Section of Textile and Textile Articles covering Chapters 50 to 63 does not include, "Monofilament of which any cross-sectional dimension exceeds 1 mm or strip or the like (for example, artificial straw) of an apparent width exceeding 5 mm, of plastics (chapter 39), or plaits or fabrics or other basket-ware or wickerwork of such monofilament or strip. Section XI covers Textiles & Textile Articles and the aforesaid Note 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 Section XI. 2.23. Further, the aforesaid HDPE Tapes less than 5mm are woven into HDPE fabrics and are covered under Section XI. The said Woven HDPE Fabric is subjected to lamination coating with LDPE film ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rolls. Strips of liner can be seamed or welded together on site; and a number of flexible types can have their panels pre-fabricated together in the factory to fit the design shape of the pond. The edge of the pond liner can be rolled over and secured in a trench of it can be fixed to a vertical wall made in brick or concrete. 3.2 HSN 3.2.1. As per HSN 3920 Other plates, sheets, film, foil and strip, of plastics, non-cellular and not reinforced, laminated, supported or similarly combined with other materials GST RATE IS 18%. - The taxpayer is paying tax at 18% rate as per this HSN. 3.2.2. As per HSN 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 fabrics made of velvet impregnated with rubber, for converting weaving spindles (weaving beams); Bolting cloth whether or not made up; felt for cotton textile industries, woven; woven textiles felt whether or not impregnated or coated, of a kind common ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shers, polishing discs and other machinery parts of Textile articles 5911 90 90- Other After going through relevant Heading 3920 and 5911, it is found that heading 5911 covers textile products and articles of textiles The Jurisdictional office had sent mail on date-03.01.2025 and requested the taxpayer to submit his detail manufacturing process within 3 days but the taxpayer had not submitted his manufacturing process details, hence it was not possible to verify his manufacturing process in detail. But as per the short manufacturing process mentioned in the application the manufacturing process of the product under consideration is as under- "Lamifabs uses only virgin resins in their HDPE reinforced polyethylene fabric. This allows for a vert consistent geomembrane liner material, High quality LDPE coating blend allows for very long U.V. stability and excellent welding properties, abrasion resistance, and high impermeability. A high quality, high thread count HOPE scrim is used to ensure extremely high puncture resistance & tear resistance. Protection can be provided with layers of sand, concrete, fibre-matting and other materials. Pond liners are manufactured in rolls. Strip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the time of the personal hearing and the submissions made by the concerned jurisdictional officer vide letter dated 11.10.2021. 5.2 The issue to be decided is whether the product manufactured by the applicant 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 1 3.7mm. HDPE Tapes / Strips are then wound on bobbins for further processing. The second stage of the manufacturing process is the 'F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the said Notification reads, as under: (iii) "Tariff item", "sub-heading" "heading" and "Chapter" shall mean respectively a tariff item, sub-heading, heading and chapter as specified in the First Schedule to 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-l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith metal, of a kind used in industry as packing or lubricating materials; (b) Textile articles (other than those of headings 5908 to 5910) of a kind used for technical purposes (for example, textile fabrics 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mm are covered under Heading 5404 and the said strips which are woven into fabrics shall be covered under Heading 5407. The relevant portion of the explanatory notes for Chapter 5404 reads as under: - "(2) 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r by some process so as to form a fabric. Moreover a textile need not be of any particular size or strength or weight. It may be in small pieces or in big rolls; it may be 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 may 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12015/03/2020 IT dated 24.9.2021 implemented a production linked incentive scheme for textiles in order to provide incentives to the textile manufacturers. In 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the tariff items under Chapter 39 and when they can be correctly classified under Tariff Item 59111000, it would not be proper to consign it to the orphanage 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 dec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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