The main legal point established in the judgment is that the product in question is made from plastic granules and cannot be treated as textile articles, as uniformly adopted by the Appellate Authority for Advance Ruling in several states.

JUDGMENT

Heard learned advocates appearing for the parties.

By this writ petition petitioner has challenged the legality of the impugned order dated 25th October, 2018 passed by the West Bengal Appellate Authority for Advance Ruling and has prayed for two-fold relief, firstly, for declaring the impugned circular no. 80/54/2018-GST dated 31st December, 2018, issued by the Government of India, Ministry of Finance being Annexure – P-9 to the Writ Petition as unconstitutional and secondly, for setting aside the impugned order dated 25th October, 2018, passed by the West Bengal Appellate Authority for Advance Ruling.

Main issue involves in the instant writ petition relates to a classification disputes of the product in question and refusal by the authority concerned to consider the petitioner’s prayer for allowing it to change the classification of Tariff head of its same product under the Central Excise Tariff Act after introduction of the GST Act, 2017.

Facts involve in brief in the instant case as appears from relevant records are as hereunder:

Petitioner is a manufacturer of Polypropylene Leno Bags by weaving polypropylene strips (tapes). Polypropylene is a variety of plastic. The major raw material in manufacture of PP Leno Bags is plastic granules.

Petitioner, before the introduction of the Goods and Services Tax Act, 2017, had voluntarily declared its finished product under the Chapter Heading 3923 29 90 of the Central Excise Tariff Act, 1985 and enjoyed the Duty Drawback. No cogent reason has been shown by the petitioner as to why and how the Tariff Heading of the same product having same composition and involving same process of manufacturing sought to be changed from classification 3923 29 90 to 6305 33 00 except that rate of tax on the same product under the same tariff heading is higher under newly GST regime.

It appears from record that petitioner declared the aforesaid product in foreign market under the Tariff Heading 3923 29 90 and started to clear the same product in the domestic market under the Tariff Heading 6305 33 00 of the First Schedule to the Customs Tariff Act, 1975, as made applicable to GST vide Notification No. 1/2017-Central Tax (Rate) dated 28th June, 2017. Petitioner neither sought for any amendment to DGFT nor cited any reason to the department for such sudden suo moto change of Tariff Heading for only domestic market, in the Tariff Heading from 3923 29 90 to 6305 33 00.

It has been contended by the petitioner that the PP Leno Bags being manufactured by the petitioner are more in the nature of textile product and are specifically covered under Chapter Heading 6305 33 00 of the First Schedule to the Customs Tariff Act, 1975.

Petitioners filed an application for Advance Ruling in Form GST ARA-01 before the West Bengal Authority for Advance Ruling, GST (hereinafter referred to as ‘AAR’) on 9th April, 2018, seeking an advance ruling on classification of PP Leno Bag under Chapter Heading 63053300 of the said Tariff.

Advance Ruling by its order dated July 6, 2018, held that the PP Leno Bags being manufactured by the petitioner can be classified under Chapter Heading 63053300 of the said Tariff if the same is made from woven polypropylene fabric using strips not exceeding width of 5mm and without any impregnation, coating, covering or lamination with plastics.

Respondent no. 3/CGST authority concerned preferred appeal before the West Bengal Appellate Authority for Advance Ruling against the aforesaid order dated July 6, 2018.

Appellate Authority for Advance Ruling by its order dated October 25, 2018 set aside the order dated July 6, 2018 passed by the AAR and allowed the appeal filed by the respondent no. 3. Pursuant to the order of the AAR, the petitioner made ‘under protest’ payment of differential tax amounting to Rs.6,57,38,093/- for the period 1st July, 2017 to 23rd November, 2018.

Respondent no. 1 on 31st December, 2018, issued Circular bearing No. 80/54/2018-GST dated December 12, 2018 clarifying that Polypropy