The Calcutta High Court upheld the order of the Appellate Authority for Advance Ruling (AAAR) Order and held that Polypropylene (PP) Leno Bags made from Plastic Granules cannot be treated as Textile Articles.
The Petitioner,Mega Flex Plastics Ltd andAnr, is a manufacturer of Polypropylene Leno Bags by weaving polypropylene strips (tapes). Polypropylene is a variety of plastic. The major raw material in manufacture of PP Leno Bags is plastic granules. The Petitioner, before the introduction of the Goods and Services Tax Act, 2017, had voluntarily declared its finished product under the Chapter Heading 3923 29 90 of the Central Excise Tariff Act, 1985 and enjoyed the Duty Drawback.
The West Bengal Appellate Authority of Advance Ruling held that the Polypropylene Leno Bags (PP Leno Bags) manufactured by the respondent, be classified under Tariff Heading 3923 29 90.
Main issue involves in the instant writ petition relates to a classification dispute of the product in question and refusal by the authority concerned to consider the petitioner’s prayer for allowing it to change the classification of Tariff head of its same product under the Central Excise Tariff Act after introduction of the GST Act, 2017.
The Petitioner contended that though it is manufactured from plastics since it is less than 5mm in width as such it should be treated as textile product while the very same product manufactured having same composition and manufacturing of it involves same procedure was claimed by the petitioner for a long time as plastic products prior to introduction of GST regime of classification and never contended that the said classification was not correct.
The Court of observed that “In the instant case, the fact is just reverse here the petitioner wants to change the classification of the goods without any reason whatsoever and contrary to the tariff Heading of the Fiscal Statute which clearly is in favour of the Department and supports the impugned order of West Bengal Appellate Authority of Advance Ruling.”
The Court further noted that in the instant case, the impugned product, by no stretch of imagination, could be termed as Textile or Textile Products. Therefore, unless the impugned goods have been manufactured from the material which qualifies as Textiles under Chapter 63, it would not be proper to consider the same to be classified under Chapter 6305 33 00.
The Court concluded by stating that simply on the ground that width of the polypropylene strips is less than 5mm and that the rate of duty on the very same product under the same heading after the introduction of GST Act is higher and just for availing the lower rate of Tariff, it cannot be allowed to change the classification of Tariff heading.
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