The Calcutta High Court (HC) bench of Justice Md.Nizamuddin rejected the writ petition to change the tariff heading from Central Excise Tax (CET) to Goods and Services Tax (GST) to Central Excise Tax (CET) to avail lower rates.
The terse fact is that the petitioner, Mega Flex Plastics Ltd. & Anr., 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.
By means of a circular, the Board also clarified how Polypropylene Woven and Non-woven Bags, which are made using HDPE strips as raw materials, are classed as completed goods under Chapter Heading 3923 and how the product has been assigned to the HSN number 3923, which is subject to an 18% GST.
The bench added that the petitioner in the given scenario seeks to reclassify the goods without providing any justification and in violation of the Fiscal Statute’s tariff heading, which clearly favours the Department and supports the challenged decision of the West Bengal Appellate Authority of Advance Ruling.
The Court stated that in exercise of its jurisdiction under Article 226 of the Constitution of India is not inclined to allow the petitioner to change the classification of Tariff Heading to avail lower rate of Tariff under GST regime when admittedly the product of the petitioner is Polypropylene Leno Bags manufactured by weaving Polypropylene strips and the major raw material of which is plastic granules.
Further admittedly before the introduction of GST regime, petitioner had been declaring the said product under the Chapter 3923 29 90 of the Central Excise Tariff Act and enjoyed the Duty Drawback and never contended before the authority till the introduction of GST law that its classification was wrong.
The bench held that the classification of the Tariff heading cannot be changed simply because the width of the polypropylene strips is less than 5mm, the rate of duty on the exact same product under the same heading has increased since the implementation of the GST Act, and you want to take advantage of the lower rate of Tariff.
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