Ruled Paper Remains Under Heading 4802; NIL GST Depends on Actual End-Use: WBAAR

In re Mangalam Kallani HUF (GST AAR West Bengal)

Summary: The Authority for Advance Ruling, West Bengal considered an application by M/s Mangalam Kallani HUF, engaged in manufacturing ruled/lined paper sheets from uncoated paper reels, concerning classification, the availability of NIL-rate exemption under Serial No. 128 of Notification No. 10/2025-Central Tax (Rate), documentary requirements, the tax treatment of inward paper reels and input tax credit. The Authority admitted questions 1, 2 and 4 under Section 97(2) of the CGST Act, while refusing to admit question 3 because the requested ruling on declarations, undertakings and documentary requirements was considered outside the scope of the notification referred to in the application.

On classification, the Authority examined Heading 4802 and Heading 4820 of the Customs Tariff Act, 1975, including Chapter Note 5 and Chapter Note 10 of Chapter 48. It concluded that ruling/lining and cutting the paper into sheets did not move the goods into Heading 4820, because loose sheets cut to size remain outside the scope of Heading 4820. The Authority consequently classified the paper under tariff heading 480261 and tariff item 48026190 when supplied in rolls, and under tariff heading 480262 and tariff item 48026290 when supplied in sheets. On Serial No. 128 of Notification No. 10/2025-Central Tax (Rate), the Authority treated the exemption as dependent upon actual use and held that each limb of the supply chain is an independent and distinct supply.