In re Hari Om Flexipack Industries (GST AAR Maharashtra)
Maharashtra Authority for Advance Ruling (AAR) has ruled that the product “Geomembrane for Water Proof Lining – Type-II as per IS: 153151:2015” manufactured by Hari Om Flexipack Industries is classifiable under Tariff Item 5911 1000 of the GST Tariff, which falls under Chapter 59 (Textile products and articles, for technical uses).
Hari Om Flexipack Industries, a manufacturer of Geomembrane, sought clarification on whether its product should be classified under Chapter 39 (Plastics and articles thereof) or Chapter 59 of the GST Tariff.
The AAR meticulously analyzed the manufacturing process of the Geomembrane, which involves tape extrusion from HDPE granules, weaving these tapes (less than 5mm width) into HDPE woven fabrics, and then laminating these fabrics on both sides with LDPE film and other additives to create a water-impermeable membrane.
The AAR noted that the raw materials are plastics (Chapter 39). However, the process involves weaving plastic strips of less than 5mm width, which are appropriately classified under Heading 5404 (Synthetic monofilament; strip and the like of synthetic textile materials). Fabrics woven from these strips fall under Heading 5407 (Woven fabrics of synthetic filament yarn, including woven fabrics obtained from materials of heading 5404), which is within Section XI (Textiles and textile articles). The AAR cited the Supreme Court’s ruling in M/s. Porritts and Spencer (Asia) Limited, which established that any material woven into a fabric is considered a textile, irrespective of its end-use.
While Section Note 1(h) of Section XI excludes woven fabrics laminated with plastics if they can be classified under Chapter 39, the AAR emphasized the principle of specific heading prevailing over general heading (Rule 3(a) of the General Rules of Interpretation of Tariff). Chapter Heading 5911 specifically covers “Textile products and articles, for technical uses.” The AAR highlighted that Geomembrane, manufactured as per IS standards, is primarily used as pond liners for water retention in farming and other applications, exhibiting properties like high impermeability, puncture and tear resistance, and UV stability.
Furthermore, the AAR noted that the Ministry of Textile’s Notification No. 12015/03/2020 IT dated 24.9.2021 includes “Geo Textiles, including geomembranes” under the category of technical textile products. The Bureau of Indian Standards also classifies IS 153151:2015 as “Agro Textiles – Laminated High Density Polyethylene woven geo membrane for water proof lining” under the group of Textile for special use. The AAR also acknowledged the documented use of Geomembrane in aquaculture using Biofloc technology, further indicating its technical application.
The AAR distinguished the case from the Gujarat AAR ruling relied upon by the concerned officer, noting that the Gujarat High Court had subsequently set aside that ruling, holding that Geomembrane is classifiable under Chapter 59. The AAR also cited other similar rulings by the Advance Ruling Authority in Gujarat classifying Geomembrane under Tariff Item 5911 1000.
Based on the manufacturing process, the specific characteristics and intended use of Geomembrane as a technical textile for water proof lining, and the precedence of a specific heading, the AAR concluded that the product is appropriately classifiable under Tariff Item 5911 1000, which covers “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.” The AAR reasoned that when a classification based on the specification and use of a product is possible under a specific heading like 5911, it should not be classified under the general and residuary entry of “Other articles of plastics” under Chapter 3926.
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, MAHARASHTRA
