The Gujarat Authority for Advance Ruling ( AAR ) has recently ruled that items such as table covers, TV covers, and washing machine covers attract 18% Goods and Services Tax.
This decision was made in the case of Om Vinyls Private Limited, where the company sought clarification on the GST classification for nonwoven coated fabrics coated, laminated, or impregnated with PVC.
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The applicant is before the Authority raising the following questions –
under HSN 56031400?
lall under IISN 56031400 then it will fall under which heading of chapter 50?
fall under HSN 56031400 then it will fall under which heading of chapter 39?
Shri Jagdish Surti, Satish Patel and Hitesh Patel appeared on behalf of the applicant and reiterated their submissions. Additional Commissioner, CGST, Surat Commissionerate, vide a letter submitted its comments as follows:
As the product is declared by the applicant as non-woven fabric coated, laminated, impregnated with plastics, the product cannot fall under Section XI of the First Schedule to the Customs Tariff Act, 1975 in terms of Note 1(h) of Section-X1 of the First Schedule to the Customs Tariff Act, 1975, which is reproduced below:
1 . This Section does not cover:
“(h) woven, knitted or crocheted fabrics, felt or nonwovens, impregnated, coated, covered or laminated with plastics, or articles thereof, of Chapter 39;”
Therefore the product cannot be classified under Chapters 50 or 56 but may be classifiable under Chapter 39 of the First Schedule to the Customs Tariff Act, 1975, particularly under the heading 3921, which attracts GST at the rate of 18%.
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It was observed by the advance ruling authority bench that, “The applicant in his application and the synopsis has submitted that the main usage of his product will be as table cover, TV cover, washing machine cover and that it is also used for making bags, etc. The manufacturing process submitted, states that the non-woven fabrics is manufactured out of PVC films, adhesive gums and non-woven; that PVC films is manufactured in their factory; that the adhesive gum is prepared by mixing PVC resin & DOP; that the non-woven is used in the bottom & PVC films is used on the top of the non-woven fabrics; that the non-woven is used to get proper stitching; that PVC is used for decorative purpose while non-woven is used as a base and foundation for the non-woven fabrics.”
It was also noted that, “A conjoint reading of the manufacturing process, the section notes, chapter notes, ctc, leads us to a conclusion that the nonwoven coated fabrics coated, laminated or impregnated with PVC, will not fall under chapter 56.”
The second contention/question of the applicant was that if the product non-woven coated fabrics -coated, laminated or impregnated with PVC, does not fall under tariff item 5603 1400, then whether it will fall under chapter 50.
It was found that the product of the applicant would not fall within the ambit of chapter 50.
The third question raised is whether the product of non woven coated fabrics – coated, laminated or impregnated with PVC, would fall under which heading of chapter 39.
The applicant, in his application, without much detail, mentioned that his product is used as [a] table cover, [b] television cover [c] washing machine cover [d] for making bags, etc. Since this is the only detail that is mentioned in the application, we are constrained to limit our ruling to the above products only.
It was observed that, “since the product of the applicant is a mixture of various constituents as is already mentioned, the product is to be classified as if they consisted of the material or component which gives them their essential character, in so far as this criterion is applicable. It is already stated that the major constituent is PVC sheet which is 120 GSM out of the total 240 GSM. Therefore, the goods of the applicant viz. nonwoven coated fabrics – coated, laminated or impregnated with PVC would fall under chapter 39.”
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It was thus ruled that, “as far as bags is concerned, we find that CBIC, vide its circular dated 31 .12.2018 has provided clarification regarding GST rates and clarification in respect of nonwoven bags, wherein it is clarified that Non-Woven Bags laminated with BOPP would be classified as plastic bags under tariff item 3923 and would attract 18% GST.
According to the ruling, the nonwoven coated fabrics manufactured by the company are made of PVC films, adhesive gum, and nonwoven fabric, with PVC being the major component. The AAR concluded that these products should not be classified under Chapter 56 of the Customs Tariff Act, which covers nonwoven fabrics, because the nonwoven content in the product was below the required 50% threshold.
It was thus ruled that the products were classified under Chapter 39, which pertains to plastics and articles thereof. Specifically, table covers, TV covers, and washing machine covers fall under tariff item 3926, attracting 18% GST.
Additionally, if the product is used to manufacture bags, it would be classified under tariff item 3923, also subject to a GST rate of 18%.
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