In re Rotex Fabric Pvt Ltd (GST AAAR Gujarat)
In the present case, Non-woven bags made from polypropylene granules which is also a type of plastics made from polymerization of propylene. As mentioned in General Notes to Chapter Heading 39 of Custom Tariff Act, 1975, Plastics include materials which are capable of polymerization at some stage and therefore, in view of findings of Madhya Pradesh High Court, fabric made from polypropylene, by no stretch of imagination construed as textile but merits classification as plastic or article of plastic under Chapter Heading No. 3923.
FULL TEXT OF THE ORDER OF AUTHORITY FOR APPELLATE ADVANCE RULING, GUJARAT
At the outset we would like to make it clear that the provisions of the Central Goods and Services Tax Act, 2017 and Gujarat Goods and Services Tax Act, 2017 (hereinafter referred to as the `CGST Act, 2017′ and the `GGST Act, 2017′) are in pari materia and have the same provisions in like matter and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act, 2017 would also mean reference to the corresponding similar provisions in the GGST Act, 2017.
2. The present appeal has been filed under Section 100 of the CGST Act, 2017 and the GGST Act, 2017 by M/s. Rotex Fabric Pvt Ltd (hereinafter referred to as Appellant) against the Advance Ruling No. GUJ/GAAR/R/84/2020 dated 17.09.2020.
3. The appellant has raised the following questions for advance ruling in the application for Advance Ruling filed by it.
“1. Whether the product Non-woven Bags manufactured through the intermediate product, Non-Woven Fabrics classifiable under Heading No. 5603 are properly classifiable under Heading No.6305 or under Heading 3923?
2. Whether the product Non-woven Bags would be eligible for exemption under Notification No. 01/2017-CT (Rate) and 01/2017-IT (Rate) dated 28.06.2017, as amended?”
4. The appellant has submitted that they are engaged in the manufacturing of Non-Woven Bags through the intermediate product i.e. Non-Woven fabrics manufactured from Fiber Grade poly propylene granules by adopting Spun Bond technology, in which poly propylene granules are fed to the hopper and passed through extruder at certain temperature and the melted material after filtering passed through the spinning unit to obtain a continuous single filament which are subjected to lying on the continuous web and under control pressure thermal bonding resulting in product namely Non-Woven fabric which is used called Polypropylene Nonwoven fabric.
5. The appellant has submitted that in view of general rules of interpretation, their product is classifiable under Heading No. 6305.3300 and that Director of DKTE Center of Excellence in Non Wovens clarified that polypropylene non-woven fabrics are basically textiles and not plastic and therefore are classifiable under Heading No. 5603. The appellant also submitted that Commissioner, CGST, Madurai vide letter dated 01.01.2018 had clarified to Madurai District Non-Woven Bag and Cotton Bag Manufacturer Association that non-woven bags are classifiable under Heading 63059000 and eligible for exemption under Notification No. 01/2017-CT(Rate). The appellant also submitted that West Bengal Appellate Authority for Advance Ruling vide ruling 02/WBAAAR/Appeal/2019 dated 13.05.2019 have settled the law that polypropylene non-woven bags are classifiable under Heading 6305.3300 and therefore would prevail over the clarification issued by TRU vide Circular No. 80/54/2018-GST wherein polypropylene non-woven bags are classified under Heading 3923 and attract 18% GST. The appellant also relied upon judgment of Supreme Court in case of Porritts and Spencers (Asia) Ltd V/s State of Haryana [1983 (13) ELT 1607 (S.C.)] wherein it was held that the word ‘textile’ would also cover the fabric manufactured through any material.
6. The Gujarat Authority for Advance Ruling (herein after referred to as ‘the GAAR’), vide Advance Ruling No. GURGAAR/R/84/2020 dated 17.09.2020, inter-alia observed that in view of Madhya Pradesh High Court Judgment in case of M/s Raj Packwell Ltd, fiber manufactured from polypropylene granules cannot be considered as textile in view of Textiles Committee Act, 1963 and hence classification of polypropylene non-woven bags under Heading 6305 is not correct. Further, the ruling of WBAAR relied upon by appellant is not applicable in provisions of Section 103 of CGST Act. GAAR also observed that in view of CBIC (TRU) Circular No. 80/54/2018-GST dated 31.12.2018, polypropylene woven and non woven bags as classifiable under Chapter Heading 3923.
6.1 In view of the foregoing, the GAAR ruled as follows:-
“Ques.l. Whether the product Non-woven Bags manufactured through the intermediate product, Non-Woven Fabrics classifiable under Heading No. 5603 are properly classifiable under Heading No. 6305 or under Heading 3923?
Ans: The Non-Woven Bags manufactured through the intermediate product i.e. Non-Woven fabric manufactured from fiber grade polypropylene granules by adopting the Spun Bond technology, merits classification under HS code 3923. The rate of GST applicable on said products during different periods are as below:
