In re V.M. Technocoatings (GST AAR Uttar Pradesh)
Ques. Whether HSN applicable to eco-friendly expandable paper wrap (honeycomb paper for wrapping) is 48239013 or 480840902
Answer- The HSN code of the product namely “eco-friendly expandable paper wrap (honeycomb paper for wrapping)” is 48239013.
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING,UTTAR PRADESH
1. Shri Vikas Jain is registered under GSTIN 09ADBPJ1040R1ZG under trade name M/s V.M. Technocoatings having principal address at E-81, Site-IV, UPSIDC, Surajpur Industrial Area, Greater Noida, Gautam Buddha Nagar, Uttar Pradesh-201206 (hereinafter referred as “the applicant”). The applicant is an individual undertaking a process to prepare eco-friendly expandable paper wrap (replacement of bubble wrap) from kraft paper and to sell the same in open market.
2. The applicant has submitted application for Advance Ruling dated 02.06.2022 enclosing dully filled Form ARA-01 (the application form for Advance Ruling) along with annexure and attachments. The applicant in his application has sought advance ruling on following question-
” Whether HSN applicable to eco-friendly expandable paper wrap (honeycomb paper for wrapping) is 48239013 or 48084090 ?’
3. As per declaration given by the applicant in Form ARA-01, the issue raised by the applicant is neither pending nor decided in any proceedings under any of the provisions of the Act, against the applicant.
4. The applicant has submitted that-
(1) They are undertaking a process to prepare eco-friendly expandable paper wrap (replacement of bubble wrap) from kraft paper and to sell the same in open market.
(2) First they prepare the core material by using the two or more sheets of honeycomb like structure kraft paper which is glued together in an alternate glue strip pattern to create structure of multiple layers of kraft paper in vertical direction. These corrugated layers open out in the form of continuous honeycomb like grid with center of each corrugated strip attached to another layer of corrugated strip upon expansion. Depending upon the product being packed with this material, multiple paper honeycomb wrap may be glued together to make specific design of packing material.
(3) These paper honeycomb used in the primary packing of goods as a cushioning material, separators or edge protector, to make shipping cartons of goods and as pallets and pallet boxes.
(4) This paper honeycomb wrap consists of 80 to 90% of kraft paper and rest is other adhesive, hence this paper honeycomb wrap classifies under HSN 4808 category. Contrary to this, 4823-chapter heading is more oriented towards ‘other paper, paperboard, cellulose wadding and webs of cellulose fibers’ etc. and not specific to kraft paper products.
5. The applicant have submitted their interpretation of law as under-
(1) In trade parlance, kraft paper is the main raw-material to make honeycomb wrapping paper and this impugned product contains 80-90% of kraft paper and rest other things are consumable items.
(2) Reliance is placed on recent pronouncement of the Hon’ble Advance Ruling Authority (GST) of Karnataka in the matters of M/s LSQUARE ECO PRODUCTS PVT. LTD. [2020 (37) GSTL 394 (AAR-GST-Kar.] and the relevant extract is reproduced below for instant reference:
“Therefore, on verification of the structure and purpose for which kraft paper honeycomb board or paper honeycomb board used are similar to the corrugated paperboard (listed under 4808 10 00), only difference is that this paper honeycomb board consists of honeycomb like structure core material at the center and on either side of this one or more layer of kraft paper is glued by using adhesive with fluting direction being perpendicular to corrugated boards. Hence this honeycomb paperboard classified under the Heading 4808 90 00 as other instead 4808 10 00.”
(3) In the aforesaid case, question before the Hon’ble Authority was to determine the classification of honeycomb wrapping paper made up of kraft paper and the authority was convinced that correct classification is 4808-9000 which attracts 12% GST.
(4) Relevant extract of this chapter heading is reproduced below for instant reference:
