18% GST on PVC Raincoat: AAR [Read Order]

In a recent ruling, the West Bengal Authority for Advance Ruling (AAR) has determined that Polyvinyl Chloride (PVC) raincoats shall be classified under HSN 3926 as plastic articles and attract a Goods and Services Tax (GST) of 18%.

The AAR ruling came following an application filed by Aristocrat Industries Private Limited (Aristocrat), a Kolkata-based manufacturer engaged in the production and supply of PVC raincoats. PVC being highly durable and water-resistant is an ideal material for crafting raincoats as protective outerwear.

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The two-fold application made by Aristocrat sought clarification on whether PVC raincoats should be categorized under HSN Code 3926, which pertains to plastic articles, or under HSN Code 6201 which covers textile garments. Additionally, the applicant inquired whether a lower GST rate of 5% would be applicable if the price of the raincoats were below ₹1,000.

Chartered Accountant Vikash Dhanania and Authorized Representative Sumit Jaiwal appearing on behalf of Aristocrat contended that PVC raincoats, though primarily made from polyvinyl chloride (PVC), are functionally designed as protective outerwear and should be classified under HSN Code 6201 as articles of apparel.

The counsel referred to a recent ruling by the Customs Authority for Advance Rulings (CAAR) in the case of NZ Seasonal Wear Pvt. Ltd., which classified similar PVC raincoats under HSN Code 6201, recognizing them as textile garments due to their composition and intended use.

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The two-member bench of Tanisha Dutta, Joint Commissioner, CGST & CX, and Joyjit Banik, Additional Commissioner, SGST observed that PVC, being a synthetic polymer, is explicitly covered under Chapter 39 of the Customs Tariff Act, 1975. The authority highlighted that the chapter notes of Section XI, which deals with textile articles, exclude materials that are classified under Chapter 39.

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While the Bench in NZ Seasonal Wear (supra) relied on the intended use of the raincoats and the interpretation that certain non-woven synthetic garments could still be categorized as textile apparel under HSN 6201, the West Bengal AAR in the present matter rejected the analogy and made a clear distinction.

The bench ruled that PVC raincoats do not qualify as textile apparel because they are made entirely from polyvinyl chloride (PVC), which falls squarely within Chapter 39 of the Customs Tariff Act. The authority emphasized that even though PVC raincoats serve as protective outerwear, their composition and method of manufacture make them plastic articles rather than textile garments.

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Referring to the General Rules for the Interpretation of the Harmonized System (HSN), which state that specific classifications (such as plastic under HSN 3926) override general classifications (such as garments under HSN 6201).

Accordingly, the authority ruled that Aristocrat Industries Private Limited’s PVC raincoats fall under HSN 3926 and attract an 18% GST rate under Entry No. 111 of Schedule III of Notification No. 01/2017-Central Tax (Rate).

To Read the full text of the Order CLICK HERE

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