In re Dollar Garments Private Limited (GST AAR West Bengal)
Authority for Advance Ruling (AAR) West Bengal delivered a ruling on the GST classification of PVC raincoats manufactured by Dollar Garments Private Limited. The company sought clarity on whether these raincoats should be categorized as plastic articles under HSN Code 3926 or as textile garments under HSN Code 6201. The classification would determine the applicable GST rate, especially for raincoats priced below ₹1,000, which could attract a lower tax rate.
Dollar Garments contended that PVC raincoats should be classified under HSN 6201, citing a similar ruling by the Customs Authority for Advance Rulings (CAAR) in NZ Seasonal Wear Pvt. Ltd. In that case, PVC raincoats were classified under CTI 6201 4010, a category for overcoats and raincoats made of man-made fibers, attracting a 5% GST rate when priced below ₹1,000. The applicant relied on provisions from the Customs Tariff Act, 1975, and CGST Notification 01/2017, which states that Customs Tariff classifications apply for GST purposes.
However, the AAR West Bengal ruled that PVC raincoats should be classified under HSN Code 3926, which covers articles of plastic. The key reasoning was that PVC, being a synthetic polymer, is not considered a textile material, and the raincoats did not meet the criteria for apparel classification under Chapter 62 of the Customs Tariff Act. The ruling referred to Saurashtra Chemicals [1986 (23) E.L.T. 283], which emphasized the importance of adhering to statutory section and chapter notes for product classification. Given that PVC raincoats do not involve woven textile fabrics but rather plastic-based fusion techniques, the authority determined that classification under HSN 3926 was appropriate, attracting an 18% GST rate.
