In re Dollar Garments Private Limited (GST AAAR West Benagal)
The West Bengal Authority for Appellate Advance Ruling (AAAR) recently ruled that PVC raincoats manufactured by Dollar Garments Private Limited are to be classified as plastic articles under HSN Code 3926, subject to an 18% Goods and Services Tax (GST). This decision came from an appeal by the manufacturer seeking classification as a textile item (HSN Code 6201), which would potentially attract a lower GST rate of 5% if priced under ₹1,000. The original West Bengal Authority for Advance Ruling (WBAAR) had previously determined that since PVC raincoats are made from polyvinyl chloride and produced through a fusion (non-woven) method, they do not qualify as woven textile fabric.
Dollar Garments Private Limited challenged this, arguing that the raincoats’ intended function as apparel, combined with judicial interpretations of the term “textile,” should lead to their classification under HSN 6201. They highlighted that HSN Explanatory Notes for Chapter 62 include raincoats and cited Supreme Court rulings which broadly defined “textiles” to encompass woven fabrics irrespective of the material or technique used. However, the Revenue countered that PVC is a synthetic polymer, distinct from natural textile materials. The AAAR, after reviewing arguments and the Harmonized System of Nomenclature (HSN) Explanatory Notes for both Chapters 39 (Plastics) and 62 (Articles of Apparel), concluded that these classifications are mutually exclusive. Chapter 39 specifically includes “raincoats” under articles made by sealing plastic sheets. The AAAR also referenced a Supreme Court judgment in Porritts & Spencer (Asia) Ltd. vs. State of Haryana, which defines “textiles” as woven fabrics, and found that PVC raincoats, being non-woven and sealed, do not meet this criterion. Consequently, the AAAR upheld the earlier ruling, confirming the classification of PVC raincoats as plastic articles under HSN 3926 with an 18% GST rate.
