Dismissed

M/s Karam Green Bags.

GST AAAR12 Jul 2022GUJ/GAAAR/APPEAL/2022/10

Case brief

AI extract

What is this about?

This appeal concerns the GST classification of polypropylene non-woven bags. The Appellate Authority for Advance Ruling (AAAR) dismissed the appeal and upheld the original Advance Ruling, holding that polypropylene non-woven bags are plastics (HSN 3923) based on the TRU circular and distinguishing textile precedents.

What did the court decide?

The appeal was rejected; the Advance Ruling classifying goods under HSN 3923 was upheld.

M/s Karam Green Bags. — GST and Indirect Tax | GST AAAR (2022)

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¶2

GUJARAT APPELLATE AUTHORITY FOR ADVANCf, RULING GOODS AND SERVICES TAX t#fl0' D/5, RAJYA KAR BHAVAN, ASHRAM ROAD, '{fl^MAnKET AHMEDABAD^_ 380 OO9,

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ADVANCE RULINC (APPEAL) NO. GUJ/GAAAR/APPEALI2O22/ 70 (lN APPLICATION NO. Advance Ruling/SGST&CGST 120201 AR126)

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Date :1L.07.2022

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Nameandaddressolthe	M/s.KaramGreen Bags,
appellant	PlotNo.190,GroundFloor,SurvcyNo.127,Nr. ShantidharnSociety.SIDCMainRoad,Veraval, Gujarat
GSTIN oftheappellant	24AAKFK2714K1ZC
AdvanceRuling No.andDate	GUJ/GAARiR/6312020datedI7.09.2020
Dateofappeal	26.t0.2020
DateofPersonalHearing	31.05.2022
Presentfortheappellant	ShriParesh Sheth,(Advocate)

¶6

At the outset we would like to make it clear that the provisions of the Central Goods and Services Tax Act, 2017 and Gujarat Goods and Services Tax Act, 2017 (hereinafter referred to as the 'CGST Act, 2017' and the 'GGST Act, 2017') are in pari materia and have the sarre provisions in like matter and dilfer from each other only on a few specilic provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Acq20l'7 rvould also rnean relerence to the corresponding similar provisions in the GGST Acl,2017 .

¶7

The present appeal has been filed under Section 100 of the CGST Act, 2017 and the GGST Acl, 2017 by M/s. Karam Green Bags (hereinafter referred to as Appellant) against the Advance Ruling No. GUJ/GAAR/R/6312020 dated 17.09.2020.

¶8

The appellant has raised the following questions for advance ruling in thc application for Advance Ruling filed by it.

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" l.Whether the product Non-woven Bags monufactured lhrough the intermediate product, Non-Iloven Fabrics classifiable under Heading No. 5603 are properly clossifiable under Heading No.6305 or under Heading 3923?

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Whether the product Non-woven Bags would be eligible for exemption under Notification No.0l/2017-CT (Rate) and 0l/2017-lT(Rote) dated 28.06.2017, as amended?^"

¶11

The appellant has submitted that they are engaged in the manufacturing of NonWoven Bags through the intermediate product i.e. Non-Woven fabrics manufactured from Fiber Grade poly propylene granules by adopting Spun Bond technology, in which poly propylene granules are fed to the hopper and passed through extruder at certain temperature and the melted material after filtering passed through the spinning unit to

¶12

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5) (cs

¶13

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obtain a continuous single filament which are subjected to lying on the continuous web and under control pressure thermal bonding resulting in product namely Non-Woven f'abric which is used in manulacturing of Non-Woven Bags.

¶15

The appellant has submittcd that in view of general rules of interpretation, their product is classifiable under Iicading No.6305.3300 and that Director of DKTE center of Excellence in Non Wovcns clarified that polypropylene non-woven fabrics are basically textiles and not plastic and therefore are classifiable undcr Heading No. 5603. '['hc appellant also submitted that Commissioner, CGST, Madurai vide letter dated 0 I .0 I .201 8 had clarified ro Madurai District Non-Woven Bag and Cotton Bag Manufacturer Association that non-woven bags are classifiable under Heading 63059000 and eligible for exemption under Notification No.0l/2017-cr(Rate). The appellant also submitted that West Bengal Appellate Authority for Advance Ruling vide ruling O2lWBAAAzuAppeal/2019 dated 13.05.2019 have senled thc taw that polypropylene non-woven bags are classifiable under Heading 6305.3300 and therefore would prevail over the clarification issue d by TRU vide Circular No. 80/54/201 8-GST wherein polypropylene non-woven bags are classified under Heading 3923 and attract 18% GST. 'fhe appellant also relied upon judgment of Supreme Court in case of porritts and Spcncers (Asia) Ltd V/s Statc ol'I{aryana [1983 (13) ELT 1607 (S.C.)] wherein it was hcld that the word 'textile' rvould also cover the fabric rnanufactured through any material.

¶16

The Gujarat Authority lbr Advance Ruling (herein afrer referred to as 'the GAAR'), vide Advance Ruling No. GUJ/GAAR/zu63/2020 dated 17.09.2020, inter-alia observed that in view of Madhya Pradesh High Court Judgment in case of tWs Raj Packwell Ltd, fiber manufactured lrom polypropylene granulcs cannot be considered as textile in view of^'fextiles Committec Act, 1963 and hence classification of polypropylene non-woven bags under Heading 6305 is not correct. Further, the ruling of WBAAR relied upon by appellant is not applicable in provisions of Section 103 of CGST Act. GAAR also observed that in view of CBIC (TRU) Circular No. 80/541201S-GST dated 31.12.2018, polypropylenc woven and non woven bags as classifiable under Chapter Hcading 3923.

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I In vicw of the foregoing, thc GAAR ruled as follows:-

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"Ques.l.Whether the product Non-woven Bags manufactured through the intermediate product, Non-lYoven Fabrics classifiable under Heading No. 5603 are properly classifiable under Heading No. 6305 or under Heading 3923?

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Ans: The Non-Ll/oven Bags manufactured through the intermediate product i.e. Non-Woven fabric manufocttrred from fiber grade polypropylene granules by adopting the Spun Bond technologt, merits classification under HS code 3923. The rate of GST applicable on said products during dffirent periods are as below:

¶20

Sr.No.	Period	Ratcof CGST	Rateof SGST	Totalrate ofGST
I	01.07.2011 to30.09.20l9	9Yo	9Yo	lB,yo
					I

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ftt>

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2	01.10.2019to30.12.2019	6%	6%	120
3	01.0I.2020totilldate	9%	9o/o	180

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Ques.2.^{lYhetherthe productNon-woven Bags wouldbe eligible} for^exemption under Notification No.0I/2017-CT(Rate) and 0l /2017-IT(Rate) dated 28.06. 20 I 7, as amended?

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Ans: Answered in negative...^"

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Aggrieved by the aforesaid advance ruling, the appellant has filed the^present appeal.

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7 .l The appellant in the ground of appeal has submitted that the GAAR erred in holding that polypropylene non-woven and non-laminated bags are classifiable^under Chapter Heading 3923 and in not considering their subrrission, in^view of^Rules ol Interpretation, Chapter Heading 6305.3300 being specific^{heading would prevailover the} general Chapter Heading 3923.

¶28

7.2 The appellant submitted that the GAAR erred in^{stating that the decisions ol} Advance Ruling Authority and Appellate Advance Ruling Authority^{are binding on} applicant under Section 103 of CGST Act^without considering^{the fact that the Advancc} Ruling Authority and Appellate Advance Ruling^Authority. as^relerred in^their submission, have settled the law and confirmed the^{classificationof polypropylenenon-} woven bags under Chapter Heading 6305.3300 and same^{were of binding/persuasive in} nature. Further, the decision of Appellate Advancc Ruling Authority^{waspronounced} after the clarification issued by TRU vide Circular No.^{80/54l2018-GSTdated} 31.12.2018 and therefore would^prevail over clarification.

¶29

7.3 The appellant submitted that GAAR erred^{in followingthe decisionof Madhya} Pradesh High Court in case of IWs Raj Pack Wcll^{Ltd as product under consideration} before High Court was Woven Bags and therefore^{ths said dccisionis not applicablcin} present case. The appellant lurther submitted that GAAR erred in lollowing clarification issued by TRU, CBIC as the said clarification^{pertains to Non-woven bags laminated} with BOPP and in Para 7.5 of said circular. it is specifically^{stated that non-laminated} bags would merit classification^{as per} their^{constitucnt matcrials.}

¶30

7.4 The appellant submitted that GAAR^{ignored the f-act that Directorof DKTE} Center of Excellence in Non Wovens clarified^{beyond doubt thatpolypropylenenon-} woven is textile material and not plastic and therefore,^{the product manufactured lrom} such material could never be classified^{as plastic matcrial.The appellantfurther} submitted that GAAR ignored that the Supreme Court,^{on sirnilarissue,in case of Porritts} and Spencers^(Asia) Limitcd V/s State of^{I-Iar1'anasettled thc larv that the word 'textile'} would also cover the fabric tnanufactured through^{anymaterial. The appellant submitted} that from finding of Supremc Court,^{it is clear thatt-abriccan be manufacturedfromany} material and need not necessarily be only lrom cotton.

¶31

The appellant vide their additional submission^{dated 12.01.2022submittedthal} GAAR failed in considering the^flact that^{while referring to the decisionin case of Porritts}

AllMEO

and spencers (Asia) Limited V/s Srate of Haryana, it is not the intention but the finding is to be looked into. The Suprcme Court in above case settled the law that textile means when yarn. whether cotton. silk, rvoolen, rayon, nylon or made out of any other material is woven into fabric and the lncthod ol'weaving may be warp and woof pattern as adopted generally in most of thc tcxtiles, or it may be another process. Due to advance in technology, variety ol labrics arc manufactured from various unknown materials using new techniques invented for making fabric out of yarn so, it would be unwise to conhne the weaving process to the warp and wool pattern; weaving of yarn would mean binding or putting together by some process to forrn a fabric.

¶36

8.1 The appellant vide their additional submission submitted that GAAR erred while dealing with decision of Appellate Authority for Advance Ruling in case of M/s U.S.Polytech observing rhar said ruling is not applicable in view of Section 103 ofGGST Act. It is settled law thar any decision of Higher Appellate Authority is binding on lower authority and therefore. finding of GAAR is misapprehension of law as Section 103 of GGST Act does not speak thar rhc order of Appellate Advance Ruling Authority would not be binding on the Advance Ruling Authority.

¶37

8.2 The appellant lurther submitted rhe Audit objection, raised in case of IWs Girivarya Non-woven Fabrics Pvt Ltd (firm engaged in similar business), dated 26.11.2020 and reply thereof, on accounr of pre-consultation to SCN, given by commissioner dated 06.01.2021. The commissioner on basis of submission made by appellant at the time of hearing of pre-consultation, dropped the audit objection and also confirmed the classification of Non-woven fabrics under chapter Heading No.5603.

¶38

8.3 Further, The appellant relied upon following judgments in suppofi of their claim:

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(i) Anuradha Processors V/s Commissioner of C.Ex. t2OO7 (213) ELT 351,

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(ii) Tirupathi Non-woven Pvr l.td Vs Commissioner of C.Ex. t2016(10) TMI 6461,

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(iii) Trade Notice No. 35/2001 dated 09.05.2001 issued by commissioner of c.Ex., Vadodara,

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(iv) Onkyo Sight & Sound India Lrd [2019(368) ELT 683 (Tri-Chennai)],

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(v) Amit Cotton Indusrries [2019 (29) GSTL 200],

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(vi) Senthilkumar Thilagavathy 12019 (25) GSTL t45l and

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(vii) Claris Lifesciences Ltd Vs UOI [2014 (305) ELT a97 (Guj)]

¶46

During the course of personal hearing held on 31.05.2022, the advocate for the appellant reiterated the submissions made in the appeal dated 02.01.2021 and additional submissions made vide thcir letter dated 12.01.2022.The advocate for the appellant also submitted that they are manul'acturing non-woven non-laminated bags and the same should be classified under 6305. That GAAR has given no findings on the Section Note of chapter 39. That GAAR has not considered their manufacturing process. That the product manulactured by them will fall, as described, under para 7.5 of Board,s circular No. 80/541201 8-GST dated 3 1.12.2018.

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FINDINGS:-

¶50

We have carefully gone through and considered the appeal and written submissions filed by the appellant, submissions made at the time of^personal hearing. Advance Ruling given by the GAAR and other material available on record.

¶51

The main issue here is to decide the classification of the^product viz. Poly Propylene Non-Woven Bags manufactured from intermediate^product i.e. Poly Propylene Non-Woven fabrics which in turn is manufacturcd frorr Iriber^{grade poly propylene} granules by adopting the Spun Bond technology.

¶52

The appellant in its submission stated that they are cngaged in manufacturing ol' non-woven bags through the intermediate product non-woven labrics manufactured from fiber grade polypropylene^granules by adopting Spun Bond technology in^which polypropylene granules are passed through extruder at certain temperature. the melted material is converted into single filament after passing through spinning unit. Then,^these filaments are laid on continuous web under control^pressure thermal bonding^{resulting in} non-woven fabric and the said intermediate^product "poly^{propylenenon-woven fabrics"} is classifiable under Chapter Heading 5603 and subsequently Poly Propylene^Non-woven Bags is classifiable under Chapter Heading 6305 of Customs l'ariff^Act,1975.

¶53

We find that the classification of^goods under^{GS'fregime has to be donein} accordance with the Customs Tariff Act, 1975,^{rvhich in} turn^{is based on Harmonized} System of Nomenclature,^popularly known as^{'HSN'.The rulcs of interpretation, section} notes and chapter notes as specified under the Custotns Tariff Act,^{1975 arealso} applicable for classification of Goods under GST reginre.^{I Iorvcver, once an item is} classified in accordance with the Customs Tariff^{Act. 1975, the rate of tax applicable} would be arrived at on the basis of notifications issued^{under GST} by^respective Govemments.

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The appellant claimed that Poly Propylene^{Non-Wovcn bag is classifiableunder} Chapter Heading 6305 of Customs Tariff Act,^{1975whichis elaborated below:}

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CHAPTER 63

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6305Sacks and bags, of a kind used for the^packing of^goods 6305.10Of^jute or of other textile base fibres of heading 5303 6305.20Of cotton Of man made textile materials: 6305.12Flexible intermediate bulk containers 6305.33Other, of^polyethylene or^{polypropylene} strip or the^like 6305.19Other 6305.90Of other textile mateials

¶57

This heading covers textile sacks and bags of a kind normally^{used for packing of} goods for transporT, storage or sale.

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These articles which vary in size and shape, include in^{parlicularflexible} intermediate bulk containers, coal^grain, flour,^{potato,coffee or similar s}

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(

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mail bags, and small bags of kind used for sending samples of merchandise by post. The heading also includes such afticles as lea sachels.

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Packing cloths which after use as bale wrapping are roughly or loosely stitched together at the edges, but which do not constitute finished or unfinished sacks or bags, are excluded (heading 6307).

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The GAAR held that Poly Propylene Non-woven bag is classifiable under crH 3923. The relcvant chapter noles. tarifr enrry and HSN Explanatory note is given below:

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CHAPTER 39

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Plastics and articles thereof

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NOIES:

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Throughout this schedule, the expression "plastics" means those materials of headings 3901 to 3914 which are or have been capabte, either at the moment of polymerisation or at some subsequent stage, of being formed under external influence (usually heat and pressure, if necessary with a solvent or ptasticiser) by moulding, casting, extruding, rolling or other process into shapes which are retained on the removal of the external influence. Throughout this schedule any reference to "plastics" also includes vulcanised fibre. The expression, however, does not apply to materials regarded as textite materials of section Xl.

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This Chapter does not cover:

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(a) lubicating preparations of heading 2710 or 3403;

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(p) goods of Section Xl (textiles and textite afticles);

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3923 ARTICLES FOR THE CONVEYANCE OR PACKING OF GOODS, OF PLASI/CS; STOPPERS, L/DS, CA?S AND OTHER CLOSURES , OF PTASI/CS 3923 10 Boxes, cases, crates and simitar artictes: Sacks and bags (including cones): 3923 21 00 Of polymers of ethytene 3923 29 Of other plastics: 3923 29 10 Of poly (vinyt chtoide) 3923 29 90 Other 3923 30 Carboys, bottles, ftasks and similar afticles 3923 40 Spoo/s, cops, bobbins and similar supports 3923 50 Stoppers, /lds, caps and other closures 3923 90 Other

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This heading covers all afticles of p/astics commonly used for the packing or conveyance of all kinds of products. The afticles covered include :

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(a) Containers such as boxes, cases, crafes, sacks and bags (including cones and refuse sacks), casks, cans, carboys, bot es and flasks.

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The heading a/so coyers :

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(i) Cups without handles having the character of containers used for the^packing or conveyance of ceftain foodstuffs, whether or not they^{have a secondary use} as tableware or toilet articles;

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(ii) Bottle preforms of p/asfics being intermediate products having tubular shape, with one closed end and one open end threaded^{to secure a screw type closure,} the portion below the threaded end being^{intended to be expanded to a desired} size and shape.

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(b) Spoo/s, cops, bobbins and similar supports, including video or audio casseffes without magnetic tape.

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The heading excludes, inter alia, household^{articlessuchas dustbrns,and cups} which are used as tableware or toilet^{afticlesand do not have the characterof} containers for the^packing or conveyance of^{goods, whether or not sometimes used} for such purposes (heading 39.24), containers of^{heading42.02 andflexible} intermediate bulk containers of heading 63.05.

¶82

We find that issue of'classification^{of product viz. PolyPropylene Non-Wovcn} bag is already covered in TRU Circular^{No. 80/54/20lll-GS'l- daled 31.12.2018.For} reference, relevant portion of above said^{circularis rcproduccd bclorv:}

¶83

"7.^{Applicabitityof GST on supply of PolypropyleneWovenand Non'} Woven Bags and PP Woven^{and Non'WovenBags laminatedwith BOPP:}

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7.1 Representations have been^{received seekingthe classificationand GST} rates on Potypropylene Woven and^{Non-Woven Bags and PolypropyleneWoven} and Non-Woven Bags laminated^{with BOPP.}

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7.2 As^per the explanatory^{notes to the HSNto HS code39.23' the heading} covers all aiicles of^plastics commonly^{usedfor the packing or conveyance of all} kinds of products and includes boxes,^{crates, cases,sacks and bags.}

¶86

7.3 Fudher as^per the Chapter^{note to Chapter 39, the expresslon'plasttcs"} means those materials of headings^{39.01 to 39.14 which are or have been} capable, either at the moment^{of potymerization or at some subsequent stage, of} being formed under external^{influence (usuallyheat and pressure,if necessary} with a solvent or^plasticizer) by^{moulding, casting, extruding, rollingor other} process lnfo shapes which are retained on the removal of the^{external influence.}

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7.4 Thus it is clarified that Polypropylene^{Woven and Non-WovenBagsand} PP Woven and Non-Woven^{Bagslaminated withBOPP would be classified} as plastic bags under HS code 3923^{and wouldattract18% GST.}

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7.5 Non-laminated woven bags would be^{classified as per their constituting} m atei als"^(e m^ph a si s su PPlied)

¶89

The GAAR also relied upon above^{circularin its rulingdated 17.09.2020. 'fhc} appellant submitted that said^{clarification/circular pertains to Non-wovenbagslaminated} with BOPP and in Para 7.5^{of said circular, it is specificallystated that non-l} xO{/

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bags would merit classification as per thcir constituent materials. From the bare perusal olthe above TRU circular, it is lbrthcoming from para 7.4 rhatthere has been mention of two product viz. 'Polypropyrene woven and Non-wove n Bags' and ,pp (Polypropylene) wovcn and Non-woven Bags laminated with Bopp, (both made liom polypropylene and separatcd by using word 'and') and both the products merit classification under HS code 3923 as mentioned in circular. In the above said circular, it is lurther stated at Para 7.5 that NonJaminatcd woven bags (made from materials other than polypropylene) would bc classified as per their constituting materials. What is manufactured by the appcllant is non-woven bags and hence para 7.4 is relevant.

¶94

In view of above we find that TRU circular d,ared, 3r.r2.201 g is squarely applicable on the product of appellant viz. poly propyrene Non-woven bag and the same is classifiable under HSN Code 3923.

¶95

l'7. As regard to appellant's submission that GAAR erred in holding that decisions of Advance Ruling Aurhoriry and Appeilare Advance Ruring Authority is not binding on applicant under Section 103 ol CGST Act without considering the lact that the Advance ILuling Authority and Apperare Advance Ruring Authority, as referred in their submission. have settled the law and confirmed the classification of polypropylene nonrvoven bags under chaprer I Ieading 6305.3300 and same rvere of binding/persuasive in nature, we find that it is clearly menrioned in Section i 03 of GGST Act, 2017 rhat Advance Ruling is applicable on the applicant who sought it as wcll as on the concemed jurisdictional officer in respect of same applicant. The appellant also submitted that I{uling of Advance Authority and Appellate Authority as mentioned in their submission was pronounced afler issuance ol^'fRU circular and hence would prevail over the TRU circular' we find thar in view of section 103 of GGST Act,2017, Advance Ruling is binding only on the applicant who sought it and dismiss the interpretation ofthe appellant that the ruling passed wourd prevail over rhe circular dared, 13.r2.2olg issued by.rRU. we also find that rhe wUAAAI{ (west Bengal Appellate Authority for Advance Ruling) vide their order no. O2/wBAAAIVAppeal/2019 dated 13.05.2019, submitted and relied upon by the appellant in their appcal, in the case of IWs. U S polytech has proceeded on the premise that the "P p Non-wovcn bags manufactured by the applicant from nonwoven fabric under FISN 5603 f'alrs under HSN 63053300,,. Thus they have not considered the classiilcation oI poly propyrenc Non-woven bags independentiy.

¶96

l7.l rhe wBAAAR in the above order had arso herd that ..The WBAAR has pronounced its ruling mainly based on the Advance Ruling order No. cr /54g2llg-c-3 dated 29.05.2018 issued by the Kerala Authority of Advance Ruling on lws. J J fabrics, Emakulam. In the said case, the primary raw materials for polypropylene shebis are polypropylene granules which are further used for manufacture of polypropylene nonwoven bags. In the instant case the polypropylene non-woven bags are manufactured tiom the non-woven polypropylene fabrics. Hence, the WBAAR "r..d i'holding that pp Non-woven Bags, specificalry made from non-woven porypropylene fabric are plastic goods to be classified under sub-heading 3923 29], The said findings do not help the appellant in the present case as the appellant here are manufacturing poly p.ropyleiie.Nonwoven Bags wherein their basic raw material is polypropylene Granules. we also find that wB A.dAR has not taken into consideration the above referred TRU circular dated 31.12.2018 issued by the Departmcnt of Revenue as there is no finding on the same.

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¶98

¶99

The appellant submitted that the GAAR erred in placing reliance upon the decision of Madhya Pradesh High Court in case of IWs Raj Pack Well Ltd as product under consideration before High Court was Woven Bags and therefore the said decision is not applicable in present case. We find that issue of classification of HDPE (High Density Poly-Ethylene, a kind of plastic) Bags or sacks is discussed at length in finding of Madhya Pradesh High Court in said^judgement. Relevant portion of the same is reproduced below:

¶100

"19. Now, textile material has not been defined in the Tariff Act. However, in the Textiles Committee Act, 1963 (Act 41 of 63) the word'fibre'has been defined in Secfion 2(a) as under:

¶101

"fibre" means man-made fibre including regenerated cellulose rayon, nylon and the like."

¶102

"Textiles" has been defined in Section 2(g) as under:

¶103

"textiles" means any fabric or cloth or yarn or garment or any other afticle made wholly or in paft of -

(i) cotton; or

(ii) wool; or

(iii) silk; or

(iv) aftificial silk or other fibre, and includes fibre;"

¶108

Therefore. accordinq to the above definition. any fabic or cloth or varn or qarment if made whollv or in parl of cotton. wool. silk. aftificial silk or other fibre shall be called textiles. The definition of^'fibre' includes the regenerated cellulose, rayon, nylon and the like. Nowhere in the aforesaid definition of^'fibre' or'textiles' plastic has been mentioned as a commoditv to be included in the definition of 'fibre' or 'textiles'. Now in the Shree Radhe lndustries case (supra) and the Shellya lndusties case (supra) inespective of the entries in the tariff as prevailing then, it has been held that the HDPE sacks are articles made of plastic; they are made of high density polyethylene which is a plastic raw material and it has fudher been held that thev are not man-made filament^yarn but are afticles of^plastic. The Circular of the Central Board of Direct Taxes dated 20-111985 also clearlv savs that the Board has decided that so lonq as the^finished afticles of olastic is made out of olastic material falling under^{Tariff ltemNo.} 15A(i). even if at the intermediate staqe afticles classifiable^{under ltem No.} 1SA(ii) if anv taiff item emerqes. the said^product would be considered to have been^produced out of the olastic material falling under Taiff ltem^{No. 15A(i) and,} therefore, the HDPE woven sacks should be considered as afticles^{of plastic and} that the Tribunal's decision be accepted. ln common^{parlance alsothe HDPE} woven sacks are known as^plastic woven sacks industry as is apparent^from the annexures filed with the^petition and the authenticity of which^{has not} been disputed. The Dv. Director of the Ministrv of Textile. Office of^Textile Commissioner has. vide letter dated 2-3-1989 informed one of the^petitioners that the HDPE/PP weavinq activitv on reoular looms as well as circular^looms manufactuinq fall under the^purview of DGTD and no installation^permissionor reqistration of circular looms is reouired under Textile^(Control) Order. 1986. Therefore. the^petitioner was advised to aoproach^{DGTD. The D.G.T.D.} ate is Annexure P-18 which has re /s ered the Com n of one

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petitioners for weavinq HDPE woven sacks As such the woven sacks are not treated as an item of textile bv the Commissioner of Textiles and the DGTD 'lastic and Pol er Direc les has re istered it as an lndus ctn HDPE woven sacks. The raw material used for the production of the HDPE stips is covered under Chapter 39 and in absence of anvthino on the record to show that the HDPE striDs are svnthetic textile material the onlv fact that their width is /ess than 5 mm would not automaticallv out that item under entry No. 54.06 of Chapter 54 of the Central Excise Tariff of lndia What the leamed Asst. Collector, C. Excrse and the Collector Appeals, Central Excise have done is that they have considered only the width of the strip and have come to the conclusion that since the strip rs of /ess than 5 mm, therefore, it falls within 54.06 ignoing the fact that in addition to this there should be something to arrive at a conclusion that the aforesaid stnp is of synthetic textile mateial. lf the strio i^'s a stnb of plastic onlv and not a svnthetic textile materjal and is also known in the common parlance as a commoditv of oIa tic, and the finished qoods i.e the HDPE woven sacks are also known in the common Darlance as^p lastic woven sacks, then it cannot be held that the strios with which such baos are woven are the stnps of svnthetic textile material.

¶113

Thus, the view of the Textile Commissioner as discussed above, the registration by the DGTD of the factory of the petitioner, the definition of 'textile' and 'fibre' as dlscussed above, the process of the manufacture of the HDPE tapes, the earlier judgments of the CEGAT approved by the Supreme Couft and accepted by the Depaftment, all clearlv^qo to show that the HDPE [ags are the baes woven bv the^plastic strips and they, therefore, are^qoods of plastic and the material used for wea VINQ lhos baas beinq the slrlps of^plastic made from plastic qranules. the strips of plastic used for weavinq the aforesaid HDPE woven sacks has lo be classified as an ltem under entry 39.20 of Chapter 39 and not under entry 54.06 of Cha^pter 54. Acco rdingly the entries of the finished goods have also to be made under the proper Chapter of the Taiff Act treating them as the finished goods made of plastic stips.

¶114

21 . ln the result we hold that HDPE strips or tapes fall under the Head 39.20, sub-heading 3920.32 of the Central Excise Tariff Act and not under Head 54.06, subheading 5406.90. Similarly the HDPE sacks fall into Heading 39.23, subheading 3923.90" (emphasis supplied)

¶115

On bare perusal of abovo portion ofjudgement, we find that the judgment in case of Raj Pack Well Ltd is squarcly applicable in principle to the present case as High Court in said casc obscrved that as per^-l'extiles Committee Act, 1963, any fabric or cloth or yarn or garment if made wholly or in part of cotton, wool, silk, artificial silk or other fibre shall be called textiles and norvhcrc in definition of textiles or fiber, the word 'plastic' is used. High Court also observed that I IDPE sacks arc made from plastic raw-material and they are not man-made filament yarn and that articles ol plastic made out of plastic materials should be considered as articles of plastic. High Court observed that Dy.Director of Ministry of Textile informed one of the petitioners that HDPEiEqlypIeWlElq rveaving activity falls under the purview of DGTD (Plastic and Polymer Directoratc) and DGTD rcgistered petitioner's company as Industry producing HDPE woven sacks. The rarv rnaterial used is covered under Chapter 39 and in absence of anything to show thal HDPE, strips are synthetic textiles materials, produqri;4ot classifiable under Chapter 5406. Therelore the producL Poly Propylene Non-Wd.fl.$X$.$;, ( " '' .i,+'ii.t "'. ,^'c#,' Page lGqtf .t

¶116

¶117

manufactured by the appellant would be covered under Chapter 39 as discussed herein above.

¶118

In the present case, Non-woven bags arc made frorn polypropylene granules which is also a type of plastics made from polymerization of' propylene. As mentioned in General Notes to Chapter Heading 39 of Custom Tarifl Act, 1975, Plastics include materials which are capable of polymerization at some stage and therefore, in view of findings of Madhya Pradesh High Court, fabric made fiorr polypropylene, by no stretch of imagination construed as textile but merits classification as plastic or article of plastic under Chapter Heading No. 3923.

¶119

The appellant submitted that the GAAR failed in considering the fact that while referring to the decision in case of Porritts and Spenccrs^(nsia) Limited V/s State ol Haryana [983 (13) ELT 1607 (S.C.)], it is not the inlention but the linding is to be looked into. The Supreme Court in above case settled the law that textile means when yam, whether cotton, silk, woolen, rayon, nylon or made out of any other material. To understand the findings of Supreme Court in above case, rclcvant portion is reproduced as under:

¶120

"6. There can, therefore, be no doubt that the word 'textiles' in ltem 30 of Schedule 'B' must be interpreted accordinq to its Dopular sense. meaninq "that scene which^peopl e conversant with the subiect-matter with which the statute is dealinq would attribute to it". There we are in complete Aqreement with the Judqes who held in favour of the Revenue and aoainst fhe assessee. But the question is: What result does the application of fhis test yield ? Are 'drver felts not 'textiles' within the ordinary acceoted meanino of that word ? the word 'fexfrles rs deived from the Latin 'texere' which means 'to weave' and it means any woven fabric. When yarn. whethe an V other descri otion as made out of an other material is woven into a fabric what comes into beinq is a 'textile' and it is known as such. lt mav be cotton textile. silk textile. woollen textile, ravon textile. nvlon textile or anv other kind of textile. The method of weaving adopted may be the warp and woof^pattern as is generally the case in most of the textiles, or it may be any other process or technique. There is such^phenomenal advance in science and technology, so wondrous is the vaiety of fabrics manufactured from mateials hithereto unknown or unthought of and so many are the new techniques invented for making fabric out of yarn that it would be rnosl unwise to confine the weaving process to the warp and woof pattern. Whatever be the mode of weaving employed, woven fabic would be^'textiles'. What is necessary is no more than weaving of yarn and weaving would mean binding or^putting together by some process so as lo form a fabic. Moreover a textile need not be of any pafticular size or strength or weight. lt may be in small^pieces or in big rolls: it may be weak or strong, light or heavy, bleach or dyed, according to the requirement of the purchaser. The use to which it may be puf ls a/so immaterid and does not bear on its character as a textile. lt ma v-be used for makinq wearina aooarel. or it mav be used as a coverinq or bedsheet or it mav be used as tapestN or upholstery or as duster for cleanino or as towel for drying the bodv. A textile ma^y have diverse uses and it is not the use which determines its character as textile. lt is, therefore, no argument against lhe assessee that^'dryer felts' are used only as absorbents of moisture in the^process of manufacture in a^paper manufacturing

¶121

I AUlnOl
e

¶122

¶123

unit. 'That cannot militate against 'dryer felts' falling within the category of 'textiles', if otherwise they satisfy the desciption of 'textiles'." (emphasis supplied)

¶124

Supreme Court further observed that:

¶125

Now, what. are 'dryer felts' ? They are of two kinds, cotton dryer felts and woollen dryer felts. Both are made of yarn, cotton in one case and woollen in the other. Some synthetic yarn is also used Ihe process employed is that of weaving according to warp and woof pattern. This is how the manufactuing process is described by the assessln g authority in its order dated 12th November, 1971 "the raw material used by the company is cotton and woollen yam which they themselves manufactured from raw cotton and wool and the finished products called 'felts' are manufactured on power looms from cotton and woollen yam." 'Dryer felts' are, therefore, clearly woven fabics and must be held to fall within the ordinary meaning of the word 'textiles'...

¶126

From perusal of above findings of Supreme Court we find that it is very clear that the product in question in above case viz. dryer felts is made from cotton and wollen rvhich is covered in the ambit of 'textile' and in present case Non-woven bags are made from polypropylene which is a rype olplastic and on this ground alone it can be said that the above case law relied by appellant is not applicable in prcsent case.

¶127

Therefore we find that the product in question viz. Polypropylene Non-woven bags merits classification under Chapter Heading 3923 of the HSN/Customs Tariff Act, 1975.

¶128

In view of the foregoing, we reject the appeal filed by appellant M/s Karam Green Bags and uphold the Advanc,.e Ruling No. GUJ/GAAR/R/63/2020 dated 17.09.2020 of the Gujarat Authority lor ance Ruling

¶129

q (Milind Torawane) Member (SGSl-)

¶130

Place : Ahmedabad Date :ll-.07.2022.

¶131

n0tt
65r,A

¶132

Ar^^-l-^*. (Scema Arora) Mernber (CGST)

¶133

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