In re Ponraj (GST AAR Tamilnadu)
Whether the category of product ‘Non-woven PP Rice Bags / Sacs’ falls under the classification of HSN 63053300 and its applicable of rate of tax is at 5%?
1. The Non-woven fabric bags called as ‘Rice Bag’ falls under HSN 63053300.
2. The applicable rate for the bag of value not exceeding Rs.1000 per piece is 2.5% CGST as per Sl.No. 224 of schedule I of Notification No 1/2017-C.T.(Rate) dated 28.06.2017 and 2.5% SGST as per S.No. 224 of Schedule-I of G.0.(Ms.) No. 62 dated 29.06.2017 No. II(2)/CTR/532(d-4)/2017 upto 30.09.2019 and thereupon upto 31.12.2019, the applicable rate is 6% CGST as per SI.No. 80AA of Schedule II of Notification no. 01/2017-C.T(Rate) dated 28.06.2017 as amended and 6% SGST as per S.No. 80AA of Schedule-II of G.O. (Ms.) No. 62 dated 29.06.2017 as amended and effective 01.01.2020, the applicable rate is 9% CGST as per Sl.No. 163B of Schedule III of Notification no. 01/2017-C.T.(Rate) date 28.06.2017 as amended by Notification no.27/2019-C.T.(Rate) dated 30.12.2019 and 9% SGST as per S.No. 163B of Schedule-III of G.O. (M.S.) No. 62 dated 29.06.2017 as amended.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, TAMILNADU
Note: Any appeal against this Advance Ruling order shall lies before the Tamil Nadu State Appellate Authority for Advance Rulings, Chennai as under Sub-Section (1) of CGST Act / TNGST Act 2017, within 30 days from the date on the ruling sought to be appealed is communicated.
At the outset, They would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the same provisions under the Tamil Nadu Goods and Service Tax Act.
Thiru V. Ponraj, Proprietor, M/s PPP Associates, 4/576, Kongalapuram, Sithurajapuram, Sivakasi, Virudhunagar 626 189. (hereinafter called the Applicant) is registered under the GST Act with GSTIN 33BYOPP4690L1ZO. The applicant has sought Advance Ruling on the following question:
Whether the category of product “Non-woven PP Rice Bags / Sacs” falls under the classification of HSN 63053300 and its applicable of rate of tax is at 5%?
The Applicant has submitted the copy of application in Form GST ARA – 01 and also copy of Challan evidencing payment of application fees of Rs.5,000/- each under sub-rule (1) of Rule 104 of CGST Rules 2017 and SGST Rules 2017.
2.1 They are manufactures of sacks and bags of Non-woven Rice Bag. They purchase non-woven fabric rolls made of 100% polypropylene fiber which are classified under HSN Code 5603 and convert the same into sheets by cutting, printing and then manmade stitched in to bag. Such Nonwoven Rice Bags are mainly used for packing rice and food products of 5 Kg, 10Kg, 20Kg and 25Kg. They have stated that this product falls under head HSN Code 6305 3300 and liable to be taxed a 5% if the sale value falls below Rs.1000/- and if the value is more than Rs.1000/- it is liable to be taxed at 12% under GST Act.
3.1 The applicant was heard in person on 28.08.2019. They submitted photographs of the manufacturing process and produced samples of the raw material used. The raw material is PP Non-woven fabric which is bought in rolls in white colour (HSN 5603 of 100-150 GSM) and then printing the designs given by their customers who are rice millers are done. It is stitched into bags with top open of 5/10/15/20 Kg Size with fixed dimension. The customer will fill the bag with rice and close the top with stitching. The applicant undertook to submit a sale invoice for each size. They further stated that all the bags are below Rs. 1,000/- per piece and should be taxed at CGST 2.5% and SGST 2.5% as per S.No. 224 of Schedule I of Notification 1/2017. They also submitted a report of a textile research association stating that the raw material is non-woven fabric and not plastics.
3.2 The applicant furnished sample Tax Invoice for purchase of ‘Nonwoven Fabric Roll’ and sample sale invoice for sale of ‘Nonwoven Rice Bag’ of 5Kg, 10 Kg, 25 Kg.
4.1 The Jurisdiction Central Tax Officer submitted the written comments. In the written comments, the following are stated:
The applicant are purchasing their raw material Viz., Non-Woven Fabric Rolls[ HSN:5603] made of 100% Polypropylene Fibre usually in white colour, at the GST rate of CGST@6% and SGST @6% for manufacture of Non-woven Fabric Bags. They are cutting the fabric rolls in to pieces of desired sizes, printing on it based on various designs. Logos required by their customers and stitching into Bags. They are selling the non-woven Fabric Bags [FISN:6305] mainly to the rice suppliers. The bags of 5 Kg, 10 Kg, 20 Kg and 25 Kg capacity are sold at the sale value not exceeding Rs. 1,000/- per piece and GST is paid at the rate of CGST:2.5% and SGST:2.5%. In a similar case, Tamilnadu Advance Ruling Authority has passed AR Order No. 12/AAR/2018 dated 27.09.2018, holding non-woven fabric bags called as `Rice Bag’ falls under HSN 63053300 and the applicable rate for the bag of value not exceeding Rs.1000 per piece is 2.5% CGST as per Sl.No. 224 of schedule I of Notification No 1/2017-C.T.(Rate) dated 28.06.2017 and 2.5% SGST as per S.No. 224 of Schedule-I of G.O.(Ms.) No. 62 dated 29.06.2017 No. II(2)/CTR/532(d-4)/2017. In view of the above, it appeared that the description of the goods manufactured by the applicant viz., Non-woven Fabric Bags is covered under Sl.No. 224 of Schedule-I of Notification No. 1/2017-C.T.(Rate) dated 28.06.2017 and the applicable rate of CGST is 2.5% for the sale value not exceeding Rs. 1000/- per piece.
5.1 We have carefully considered the various submissions made by the applicant and the comments of the jurisdictional central Tax Officer. The applicant are manufacturers of polypropylene Non-woven Fabric Rice Bags meant for use as ‘Rice Bags’. They purchase their raw material viz., Non-Woven Fabric Rolls [HSN : 5603] made of 100% Polypropylene Fibre usually in white colour, which are cut into pieces of desired sizes after printing various designs, logos required by their customers and are stitched into Bags. They are selling the nonwoven Fabric Bags classifying under HSN : 6305 mainly to the rice suppliers and the bags of 5Kg,10Kg, 20Kg and 25Kg capacity are sold at the sale value not exceeding Rs,1,000/- per piece and GST is paid. The issue for decision before us is the appropriate Rate of Tax and HSN code for Nonwoven Rice Bags manufactured by the applicant.
5.2 In terms of explanation (iii) and (iv) to Notification No. 1/2017 – Central Tax (Rate) dt. 28-06-2017, tariff heading, sub-heading, heading and chapter shall mean respectively a tariff item, sub-heading, heading and chapter as specified in the First Schedule to the Customs Tariff Act, 1975 and the rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975, including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall be applied for the interpretation and classification of goods.
5.3 In the case at hand, we find that the applicant purchases Non woven Fabric rolls made of 100% Polypropylene which are then printed with desired designs and cut into shape before being stiched into bags. Such bags are used to package to bulk items , here specifically Rice. Non woven Fabric are covered CTH 5603 as seen in the HSN Exlanatory Notes
56.03 – Nonwovens, whether or not impregnated, coated, covered or laminated.
– Of man-made filaments :
5603.11 – – Weighing not more than 25 g/m2
5603.12 – – Weighing more than 25 g/m2 but not more than 70 g/m2
5603.13 – – Weighing more than 70 g/m2 but not more than 150 g/m2
5603.14 – – Weighing more than 150 g/m2
– Other :
5603.91 – – Weighing not more than 25 g/m2
5603.92 – – Weighing more than 25 g/m2 but not more than 70 g/m2
5603.93 – – Weighing more than 70 g/m2 but not more than 150 g/m2
5603.94 – – Weighing more than 150 g/m2
A nonwoven is a sheet or web of predominantly textile fibres oriented directionally or randomly and bonded. These fibres may be of natural or man-made origin. They may be staple fibres (natural or man-made) or man-made filaments or be formed in situ.
The applicant claims that the product is classifiable under CTH 6305. The relevant chapter Note, headings, HSN Explanatory Notes are examined as under:
6305 SACKS AND BAGS, OF A KIND USED FOR THE PACKING OF GOODS
6305 10 – Of jute or of other textile bast fibres of heading 5303 :
……………………………………………………
6305 20 00 – Of cotton
Of man-made textile materials :
6305 32 00 — Flexible intermediate bulk containers
6305 330 00 — Other, of polyethylene or polypropylene strip or the like
6305 39 00 — Other
6305 90 00 – Of other textile materials
Further, explanations to the Heading 63059000, in HSN is as follows:
63.05 – Sacks and bags, of a kind used for the packing of goods (+)
6305.10 – Of jute or of other textile bast fibres of heading 53.03
6305.20 – Of cotton
– Of man-made textile materials :
6305.32 – – Flexible intermediate bulk containers
6305.33 – – Other, of polyethylene or polypropylene strip or the like
6305.39– Other
6305.90 – – Of other textile materials
This heading covers textile sacks and bags of a kind normally used for the packing of goods for transport, storage or sale.
