Whether ‘HDPE Woven Tarpaulin’ could be classified under HSN 6306 of the GST Tariff.

PJ/Case Law/2018-2019/3510

Case: EAST HOOGHLY POLYPLAST PVT LTD

Citation: 12/WBAAR/2018-19 dated 20/07/2018; ARN: 13 of 2018

Issue: Whether ‘HDPE Woven Tarpaulin’ could be classified under HSN 6306 of the GST Tariff.

Brief facts: The applicant company EAST HOOGHLY POLYPLAST PVT LTD , Super Market, Chinsurah Station Road, Chinsurah, Hooghly, West
Bengal – 712102, is registered with GSTN 19AACCE2946G1ZM, states that it is engaged in manufacturer of tarpaulins made from High Density Polyethylene (hereinafter referred to as "HDPE") a woven fabric. The Applicant manufactures Tarpaulins made of HDPE Woven Fabrics as well as Plastic tarpaulins. The Applicant also submits that tarpaulins made from HDPE woven fabric are different from plastic tarpaulins. The former is derived by weaving method using power looms after textile processing and the latter is derived from plain plastic sheets by cutting into shapes and stitching thereafter. The Applicant submits that HDPE Woven Tarpaulins, though made from HDPE, are articles of textile, and, therefore, should be classified under HSN 6306 of the GST Tariff and seeks an advance ruling on the same.

Appellant’s contention: The Applicant manufactures Tarpaulins made of HDPE Woven Fabrics as well as Plastic tarpaulins. The Applicant submits that HDPE Woven Tarpaulins, though made from HDPE, are articles of textile, and, therefore, should be classified under HSN 6306 of the GST Tariff.

Respondent’s Contention and Reasoning of Judgement: The authority has obtained various Certificates that were allotted to the Applicant. The Authority has obtained a photocopy of Eligibility Cum Registration Certificate under WBIS-2013 for MSMES in Textile Sector No 21/IV/-1015/2014 dated 13.01.2015 issued by the Office of the Handloom Development Officer, Chinsurah, Handloom, Spinning Mill, Silk Weaving & Handloom based Handicraft Division, Directorate of Textiles, Govt of West Bengal, granting Registration No 191230001 to the Applicant. In communication dated 25.05.2018 to the Joint Commissioner of State Tax, Serampore, Hooghly, the Applicant has referred to letter no 1(11)/2015/TTC/42 dated 21.12.2015 issued by the Office of the Textile Commissioner, Mumbai, Ministry of Textiles confirming allotment as a Technical Unit with Registration No 20102008. It is also seen that the Bureau of Indian Standards, Manic Haven, 9 Abrader Shah Afar Margi, New Delhi-110002, has issued Licence under CML No 5713971 valid up to 15.09.2018 to the Applicant for the product Tarpaulin made from High Density Polyethylene Woven Fabric, Multi Layer.

The License has been issued under IS 7903:2017 [Textiles - Tarpaulins Made From High Density Polyethylene (HDPE) Woven Fabrics – Specification]

The reasoning has been based on relevant Notes of Section XI of the Tariff Act which reads as under:

Note 1(g) to Section XI of the Tariff Act states that the Section of Textile and Textile Articles covering Chapters 50 to 63 does not include, "Monofilament of which any cross-sectional dimension exceeds 1 mm or strip or the like (for example, artificial straw) of an apparent width exceeding 5 mm, of plastics (chapter 39), or plaits or fabrics or other basket-ware or wickerwork of such monofilament or strip (chapter 46)"

Note 1 (h) to Section XI of the Tariff Act states that the Section of Textile and Textile Articles covering Chapters 50 to 63 does not include, "Woven, knitted or crocheted fabrics, felt or nonwovens, impregnated, coated, covered or laminated with plastics, or articles thereof, of chapter 39"

Thus it can be concluded that, to be included in Chapter 63, the width of the tapes, manufactured from Plastics or articles thereof of Chapter 39, used to weave the fabric should be less than or equal to 5mm and should not be impregnated, coated, covered or laminated with plastics or articles thereof, of chapter 39. Tariff Head 6306 covers "Tarpaulins, awnings and sun blinds; tents; sails for boats, sailboards or land craft; camping goods”. Since HDPE falls under Chapter 39, keeping in mind the Section Notes and the Tariff Heading description it is, therefore, important to ascertain, both, the width of the fabric strip that goes into the weaving and whether or not the tapes are impregnated, coated, covered or laminated with plastics or articles thereof, of Chapter 39. To further understand the same. Specifications of IS 7903:2017 under which BIS has issued a license to the Applicant have been, therefore, referred to. The laid down specifications for 'Tarpaulins made from HDPE woven fabrics'. State that the manufacturing should involve lamination of both sides of the fabric with low density polyethylene (hereinafter LDPE) or LLDPE film of extrusion coating grade. The tarpaulins are obtained by heat sealing the laminated fabric, cut to pieces of desired dimension, and subjecting it to other suitable processes for jointing and fixing of eyelets. The flow chart, as submitted by the Applicant shows manufacturing of HDPE tape from HDPE granules, weaving of the tape into fabrics, and lamination with LDPE sheets/film. The Applicant manufactures tarpaulins both from plain plastic sheet and from HDPE woven fabric conforming to IS 7903:2017. The submission also states that in the tax invoices issued both before and after GST comes into effect the Applicant has classified such tarpaulins under HSN 3926 90 99. 'Tarpaulins made of HDPE woven fabrics' are, therefore, laminate of two materials – HDPE tapes woven into fabrics and LDPE sheets/film, and therefore, as per Section Note 1(h) of Section XI (Textile and Textile Articles) cannot fall under Chapter 63.

Decision: It has been concluded that 'Tarpaulins made of HDPE woven fabrics' will not be classified under HSN 6306 of the GST Tariff.

Comment: Under this Case, EAST HOOGHLY POLYPLAST PVT LTD is involved in manufacturer of tarpaulins made from High Density Polyethylene a woven fabric. Issue under the case was about classification of the same under the correct HSN code. There was ambiguity as to whether it would be classified as per the chapters 50 to 63 or chapter 39. However, the 'Tarpaulins made of HDPE woven fabrics' are laminated with two materials – HDPE tapes woven into fabrics and LDPE sheets/film. And therefore, as per Section Note 1(h) of Section XI (Textile and Textile Articles) 'Tarpaulins made of HDPE woven fabrics' cannot fall under Chapter 63. Hence it was held that 'Tarpaulins made of HDPE woven fabrics' will not be classified under HSN 6306 of the GST Tariff.

Prepared by: Adit Gupta

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PJ/Case Law/2018-2019/3510

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