Mega Flex Plastics Limited & Anr Vs Union of India & Ors. (Calcutta High Court)
The appeal before the Calcutta High Court challenged the judgment dated February 10, 2023 passed by a learned Single Judge dismissing a writ petition concerning classification of polypropylene leno bags under the GST tariff framework. The appellant, a manufacturer of polypropylene leno bags, contended that plastic granules constituted the principal raw material used in the manufacturing process. Prior to the introduction of the Goods and Services Tax Act, 2017, the appellant had voluntarily classified the finished products under Chapter Heading 3923 2900 of the Central Excise Tariff Act, 1985 and availed duty drawback benefits. After GST came into force, the appellant claimed that the same product, with identical composition and manufacturing process, should instead be classified under Tariff Heading 6305 33 00, though the applicable tax rate became higher.
The appellant argued that polypropylene leno bags were more in the nature of textile products and specifically covered under Chapter Heading 6305 33 00 relating to sacks and bags made from polypropylene strips. An advance ruling application had been filed before the West Bengal Authority for Advance Ruling seeking classification under this heading. By order dated July 06, 2018, the AAR held that the bags could be classified under Heading 6305 33 00 if made from woven polypropylene fabric using strips not exceeding 5 mm in width and without impregnation, coating, excess or lamination with plastic. However, the West Bengal Appellate Authority for Advance Ruling subsequently set aside that ruling on October 25, 2018.
