AAR Says Honeycomb Packaging is 'Corrugated Paperboard', Rejects 'Other Article' Classification [Read Order]
The authority observed that the paper honeycomb boards were functionally equivalent to corrugated paperboard, with the only difference being their specific honeycomb structure
AAR Says Honeycomb, Honeycomb Packaging
AAR Says Honeycomb, Honeycomb Packaging
In a significant clarification on the tax treatment of specialized packaging materials, the Uttar Pradesh Authority for Advance Ruling (AAR) has determined that paper honeycomb sheets and paper edge protectors should be classified as 'corrugated paperboard' under the Goods and Services Tax (GST) regime. The ruling rejects the classification of these products as 'other articles of paper', a distinction that directly impacts the applicable GST rate. The decision provides much-needed clarity for manufacturers in the packaging industry who have faced ambiguity regarding the tax rate for these eco-friendly packaging solutions.
The ruling was delivered on an application filed by V.M. Technocoatings, a Greater Noida-based manufacturer. The company produces paper honeycomb boards, which feature a hexagonal structure for strength, and paper edge protectors, both used for cushioning and protecting goods during transport and storage. The applicant had sought an advance ruling to determine the correct Harmonized System of Nomenclature (HSN) code, as different vendors were charging GST at varying rates for these identical products, leading to confusion and potential disputes.
The core of the debate rested on whether the products should fall under HSN code 4808 90 00 as a form of paperboard or under 4823 69 00 as 'other articles of paper'. The applicant, V.M. Technocoatings, argued that their products, composed of 80-90% paper, were structurally and functionally similar to corrugated paperboard. They emphasized that the manufacturing processes, such as shaping and embossing, aligned with the description under heading 4808. To support their argument, they referenced a prior Karnataka AAR ruling from 2020 involving M/s LSquare Eco Products Pvt. Ltd., where similar honeycomb boards were classified under heading 4808.
However, the jurisdictional GST officer contested this, asserting that the items were primarily used as packing material and should be classified under the residual heading 4823 as 'other made up articles'.
After examining the submissions, the AAR bench delved into the common understanding and definitions of 'paper'. The authority observed that the paper honeycomb boards were functionally equivalent to corrugated paperboard, with the only difference being their specific honeycomb structure. The bench concluded that this structural variation does not exclude it from classification under Chapter 48, specifically under tariff item 4808 90 00, which covers other forms of corrugated, creped, or crinkled paper and paperboard.
The two-member bench, comprising Amit Kumar, Additional Commissioner (Central Tax), and Harilal Prajapati, Joint Commissioner (State Tax), unanimously ruled in favour of the applicant. The AAR officially declared that the correct HSN code for paper honeycomb sheets and paper edge protectors is 4808 90 00. This ruling is binding within the jurisdiction of Uttar Pradesh and is subject to appeal within 30 days.
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