In re Waterproof Products Manufacturers & Traders Welfare Association (GST AAR West Bengal)
The West Bengal Authority for Advance Ruling (WBAAR) delivered a ruling on the classification and GST rate applicable to raincoats made of Polyvinyl Chloride (PVC) sheets, filed by the Waterproof Products Manufacturers & Traders Welfare Association. The applicant sought clarity on the correct Harmonized System of Nomenclature (HSN) and GST rate for PVC raincoats intended for distribution among its members and other business entities, often supplied at minimal profit.
The applicant described PVC raincoats as waterproof outer jackets made from PVC sheets. The sheets are cut into panels for the front, back, sleeves, and pockets, then welded with heat. Additional fittings, such as polyester draw cords, zippers, buttons, or stoppers made of plastic or metal, are affixed before packing. The applicant contended that, as per the Customs Tariff Act, 1975 and CGST Notification 01/2017, PVC raincoats qualify as articles of apparel made of man-made fibres. They argued that PVC is a man-made polymer derived from organic monomers, and, according to the classification of textiles in the “Textile Terms and Definitions Tenth Edition” and Chapter 54 of the Customs Tariff Act, man-made fibres include polyvinyl derivatives. The applicant also cited the Madhya Pradesh AAR in NZ Seasonal Wear Pvt. Ltd. (07.08.2024), which classified PVC raincoats under HSN codes 6201 4010 and 6202 4010 for men’s and women’s raincoats, attracting 5% GST for units below Rs. 1,000 and 12% above.
The WBAAR scrutinized the manufacturing process of PVC raincoats, starting with polymerization of vinyl chloride monomers to form PVC resin granules. These granules are compounded with plasticizers, stabilizers, fillers, lubricants, and pigments. The mixture is extruded or calendared into sheets, cooled, sized, cut, heat-sealed, sewn, and finally finished for packing. Throughout this process, no fibre or filament is formed, unlike conventional man-made fibres, which are defined under Chapter 54 as staple fibres or filaments of organic polymers. The authority noted that the PVC sheet is a synthetic plastic polymer, processed and shaped under heat and pressure, qualifying as a plastic under Chapter 39 of the Customs Tariff Act, 1975.
Chapter 62, which includes overcoats, raincoats, and similar apparel made of man-made fibres under Section XI (Textiles and Textile Articles), was considered. The WBAAR concluded that PVC raincoats cannot be classified under Chapter 62 because they do not constitute textiles: no fibres, filaments, or yarns are produced during manufacturing. Similarly, they are not made from wool, cotton, or other textile materials, excluding them from HSN headings 62012010, 62013010, or 62019010.
Instead, the authority referred to Chapter 39, Section VII, covering “Plastics and articles thereof; Rubber and articles thereof.” PVC sheets meet the Chapter 39 definition of plastics—capable of being formed under external influence and retaining shape. Heading 3926 specifically includes “Articles of apparel and clothing accessories (including gloves, mittens and mitts)” made by sewing or sealing plastic sheets. Explanatory Notes of HSN 3926 clarify that plastic garments like raincoats, aprons, and belts are included. The WBAAR relied on precedents, including the Supreme Court’s judgments in Commissioner of Customs & Central Excise, Goa v. Phil Corporation (2008) and Commissioner of Central Excise v. Madhan Agro Industries (2018), emphasizing that HSN and Explanatory Notes provide reliable guidance for classification.
The authority also cited previous WBAAR decisions involving Aristocrat Industries and Dollar Industries, which consistently held that PVC raincoats, being apparel primarily composed of plastic sheets, are covered under HSN 3926 20. The mutual exclusivity of Chapters 39 and 62 confirmed that PVC raincoats cannot be classified under Chapter 62 as man-made fibre apparel.
The WBAAR concluded that PVC raincoats are articles of apparel under Chapter 39, HSN 392620. Accordingly, the supply of PVC raincoats falls under Entry No. 111 of Schedule III of CGST Notification No. 1/2017, attracting a GST rate of 9% CGST and 9% SGST, totaling 18%. The ruling clarified that attempts to classify PVC raincoats under textile-based headings are incorrect, as manufacturing does not produce fibres or yarns, and the product falls squarely under plastic apparel classifications.
Ruling:
