In re Sumilon Industries Private Limited (GST AAR Gujarat)
M/s. Sumilon Industries Private Limited, a GST-registered manufacturer and exporter based in Surat, Gujarat, sought an advance ruling regarding the classification and applicable GST rate for “Metalized Yarn” and related products, specifically Badla/Imitation Jari/Metallic Yarn produced from a micro slitting process on polyester films. The applicant manufactures Metallic Yarn, Metalized Polyester Films, Metalized & Lacquered Polyester Film, Specialty & PCT PET Films, Metallic Yarn Jan and Kasab, Resin, Intermediates, Chemicals, Dyestuff, and packaging materials under one roof. They raised six key questions concerning the distinction between “Metalized Yarn” and “Metallic Yarn,” the proper HSN classification, applicability of concessional GST rates, and eligibility for refunds on input materials.
The applicant contended that “Metalized Yarn” is equivalent to imitation zari, locally known as Kasab or Badla, and historically classified under HSN 5605. Prior to 26.07.2023, imitation zari attracted GST at 12% under Entry No. 137 of Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017. Notification No. 09/2023-CT (Rate) dated 26.07.2023 reduced the GST on imitation zari to 5% under Entry No. 218AA. However, the notification did not explicitly mention Metalized Yarn, leading to ambiguity regarding its classification and GST rate.
The revenue authorities submitted that Metalized Yarn, whether gimped or not, is covered under HSN 5605, which includes yarn combined with metal in the form of thread, strip, or powder, or yarn covered with metal by any other process. Metallic Yarn is produced from Metalized Yarn via micro slitting on polyester films. Both Metalized Yarn and Metallic Yarn are generally classified under HSN 5605. Imitation zari made from metallized polyester/plastic films falls under HSN 56050020, and a concessional GST rate of 5% is applicable from 27.07.2023, in line with Notification No. 09/2023-CT (Rate) and Circular No. 205/17/2023-GST dated 31.10.2023. The authorities clarified that no refund is available for input materials such as metallized polyester/plastic film due to the inversion of tax rates.
