AAR classifies polypropylene mats under Chapter 46 is taxable at 5%

Source: TaxGuru

Kerala AAR held that polypropylene mats (plastic mats, commonly known as ‘satranji’) manufactured by plaiting together polypropylene mono-filament strips and the like of plastics fall under Chapter 46 of Customs Tariff Act, 1975.

Some important facts:

• The AAR elucidated the process of manufacture of the plastic mat (satranji) where polypropylene is converted into tube form by applying heat and air on an extruder machine which is then cut into a specific size and used on weaving machines.
• It relied on SC ruling in Supreme Industries wherein it was held that ‘plastic satranji’ should be classified under Chapter 46, also refers to Circular No. 4/2018 dated January 24, 2018, wherein polypropylene mats are classified under tariff item 4601 01.
• Kerala Aar further rejected Revenue’s plea that polypropylene mats should be classified under Chapter 39, notes that Chapter 39 are for polymers of propylene or of other olefins in primary(liquid/crude) forms and therefore, woven plastic materials like plastic mats will not be classified under Chapter 39.
• It also held that as per Entry 103 of Schedule II of Notification No. 01/2017 Central Tax (Rate) dated June 28, 2017, and S.R.O. No. 360/2017 dated June 30, 2017, polypropylene mats are taxable at 12% GST up to January 25, 2018, and 5% GST thereafter as per Entry 198A of Schedule I of the said Notification.

The order was passed by Shri. S. Anil Kumar and Shri. B.S. Thyagarajababu.

Advocate Abdul Kalam Azad appeared on behalf of the applicant.

GST Jargon of the day

HSN : The Harmonised System of Nomenclature of HSN is an internal system of naming goods. HSN is assigned to goods by organizing them in a hierarchical manner and is 8 digits long. However, good can be identified broadly by using no less than 2 digits, and very specifically by using all the 8 digits. Depending on the turnover or nature of the sale, a business might be required to quote a 2-digit HSN, a 4-digit HSN or an 8-digit HSN (mandatory for exports).