In re Sai Ram Jari Industries (GST AAR Gujarat)
The applicant, a registered GST assessee engaged in manufacturing imitation zari thread made from lacquered coated polyester or plastic film with aluminium, sought an advance ruling on the correct HSN classification and GST rate applicable to such products. The applicant explained that zari thread in trade exists in two broad types—real zari made from gold or silver, and imitation zari made from metals like aluminium or copper. Due to rising costs, imitation zari is now commonly produced from metallised plastic or polyester film. When lacquered polyester film is slit, it becomes “Zari Badla” (metallic yarn), and when twisted with other fibres such as polyester, nylon, or viscose, it is known as “Zari Kasab.” These forms are widely used as substitutes for real zari in sarees and other textiles.
The applicant highlighted historical GST treatment, noting that imitation zari was earlier classified under HSN 5605 and taxed at 12% under Entry 137 of Schedule II toNotification 01/2017 dated 28-06-2017 However, by amendments effective 26 July 2023, imitation zari thread or yarn, by any trade name, was expressly excluded from Entry 137 and shifted to a new Entry 218AA of Schedule I, attracting 5% GST. The applicant contended that confusion arose due to the amendment and sought clarity on whether their product—imitation zari made from metallised polyester/plastic film—fell under HSN 5605 and was eligible for the reduced GST rate. They also submitted a Bill of Entry classifying similar metallic yarn under HSN 56050020 with 5% IGST.
