In re Girivarya Non Woven Fabric Pvt Ltd (GST AAAR Gujarat)
In the present case, Non-woven bags are made from polypropylene granules which are 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.
The appellant submitted that the GAAR failed in considering the fact that while referring to the decision in case of Porritts and Spencers (Asia) Limited V/s State of Haryana [1983 (13) ELT 1607 (S.C.)] it is not the intention but the finding is to be looked into. The Supreme Court in above case settled the law that textile means when yarn, whether cotton, silk, woolen, rayon, nylon or made out of any other material. To understand the findings of Supreme Court in above case, relevant portion is reproduced as under:
6. There can, therefore, be no doubt that the word ‘textiles’ in Item 30 of Schedule ‘B’ must be interpreted according to its popular sense, meaning “that scene which people conversant with the subject-matter with which the statute is dealing would attribute to it”. There we are in complete Agreement with the Judges who held in favour of the Revenue and against the assessee. But the question is: What result does the application of this test yield ? Are ‘dryer felts’ not ‘textiles’ within the ordinary accepted meaning of that word ? the word ‘textiles is derived from the Latin ‘texere’ which means ‘to weave’ and it means any woven fabric. When yarn, whether cotton, silk, woollen, rayon, nylon or of any other description as made out of any other material is woven into a fabric, what comes into being is a ‘textile’ and it is known as such. It may be cotton textile, silk textile, woollen textile, rayon textile, nylon textile or any other kind of textile. The method of weaving adopted may be the warp and woof pattern as is generally the case in most of the textiles, or it may be any other process or technique. There is such phenomenal advance in science and technology, so wondrous is the variety of fabrics manufactured from materials hithereto unknown or unthought of and so many are the new techniques invented for making fabric out of yarn that it would be most unwise to confine the weaving process to the warp and woof pattern. Whatever be the mode of weaving employed, woven fabric would be ‘textiles’. What is necessary is no more than weaving of yarn and weaving would mean binding or putting together 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, bleach 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’.” (emphasis supplied)
Supreme Court further observed that:
“7. Now, what. are ‘dryer felts’ ? They are of two kinds, cotton dryer felts and woollen dryer felts. Both are made of yarn, cotton in one case and woollen in the other. Some synthetic yarn is also used The process employed is that of weaving according to warp and woof pattern. This is how the manufacturing process is described by the assessing authority in its order dated 12th November, 1971 “the raw material used by the company is cotton and woollen yarn which they themselves manufactured from raw cotton and wool and the finished products called ‘felts’ are manufactured on power looms from cotton and woollen yam.” ‘Dryer felts’ are, therefore, clearly woven fabrics and must be held to fall within the ordinary meaning of the word ‘textiles’… “
From perusal of above findings of Supreme Court we find that it is very clear that the product in question in above case viz. dryer felts is made from cotton and wollen which is covered in the ambit of ‘textile’ and in present case Non-woven bags are made from polypropylene which is a type of plastic and on this ground alone it can be said that the above case law relied by appellant is not applicable in present case.
Therefore we find that the product in question viz. Polypropylene Non-woven bags merits classification under Chapter Heading 3923 of the HSN/Customs Tariff Act, 1975.
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. Girivarya Non Woven Fabric Pvt Ltd (hereinafter referred to as Appellant) against the Advance Ruling No. GUJ/GAAR/R/73/2020 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 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 called Polypropylene Nonwoven fabric.
5. The appellant has submitted that in view of general rules of interpretation, their product is classifiable under I leading 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 dated 31.12.2018 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. GUJ/GAAR/R/73/2020 dated 17.09.2020, inter-alia observed that in view of Madhya Pradesh High Court Judgment in case of M/s Raj Packwell Ltd. [1990 (50) ELT 201 (M.P.)], 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 WBAAAR relied upon by appellant is not applicable in terms of 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. 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?
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:
