In a decision, the West Bengal Authority for Advance Ruling (AAR) decided that raincoats made of polyvinyl chloride (PVC) would fall under HSN 3926 as plastic items and be subject to an 18% Goods and Services Tax (GST).
Following an application submitted by Aristocrat Industries Private Limited (Aristocrat), a firm situated in Kolkata that produces and distributes PVC raincoats, the AAR rendered its decision. Because PVC is so strong and water-resistant, it’s the perfect material to make raincoats and other protective gear.
The dual application submitted through Aristocrat sought clarity on whether PVC raincoats should be categorised under HSN Code 6201, which deals with textile garments, or under HSN Code 3926, which deals with plastic products. Additionally, the applicant contested whether the raincoats’ purchase price of less than Rs 1,000 would qualify for a lower GST rate of 5%.
PVC raincoats, which are mainly made of polyvinyl chloride (PVC), are functionally made as protective outerwear and should be classified as articles of apparel under HSN Code 6201, according to the arguments made by Authorised Representative Sumit Jaiwal and Aristocrat Chartered Accountant Vikash Dhanania.
The attorney cited a decision made by the Customs Authority for Advance Rulings (CAAR) in the NZ Seasonal Wear Pvt. Ltd. case, which recognised comparable PVC raincoats as textile garments because of their composition and intended usage and classified them under HSN Code 6201.
Because PVC is a synthetic polymer, it is covered by Chapter 39 of the Customs Tariff Act, 1975, according to the two-member bench made up of Tanisha Dutta, Joint Commissioner, CGST & CX, and Joyjit Banik, Additional Commissioner, SGST. The authority emphasised that materials classified under Chapter 39 are not included in the chapter notes of Section XI, which deals with textile items.
In the current case, the West Bengal AAR rejected the analogy and established a clear distinction, whereas the Bench in NZ Seasonal Wear (above) laid on the intended use of the raincoats and the interpretation that certain non-woven synthetic garments can still be classified as textile apparel under HSN 6201.
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The bench ruled that because PVC raincoats are manufactured completely of polyvinyl chloride (PVC), which is covered by Chapter 39 of the Customs Tariff Act, they do not qualify as textile apparel. Although PVC raincoats are protective outerwear, their composition and manufacturing process render them plastic items rather than textile clothing, according to the authority.
referring to the Harmonised System (HSN) broad Rules for Interpretation, which specify that specific classifications (like plastic under HSN 3926) have precedence over broad classifications (like clothing under HSN 6201). The authority concluded that, in accordance with Entry No. 111 of Schedule III of Notification No. 01/2017-Central Tax (Rate), Aristocrat Industries Private Limited’s PVC raincoats fall under HSN 3926 and are subject to an 18% GST rate.