PVC Raincoat to attract 18% GST due to classified as Non-Textile: WB AAR:

PVC Raincoat to attract 18% GST due to classified as Non-Textile: WB AAR The West Bengal Authority for Advance Ruling (West Bengal AAR) has ruled that Polyvinyl Chloride (PVC) raincoats will be classified as plastic products under HSN 3926 and will be subject to an 18% Goods and Services Tax (GST). The AAR verdict came in response to an application filed by Aristocrat Industries Private Limited (Aristocrat), a Kolkata-based manufacturer of PVC raincoats. PVC is an excellent material for making raincoats as protective apparel since it is both sturdy and water-resistant. The two-part application submitted through Aristocrat requested clarity on whether PVC raincoats should be classified under HSN Code 3926, which refers to plastic articles, or HSN Code 6201, which covers textile garments. Also, the petitioner questioned whether a lesser GST rate of 5% would apply if the raincoats cost less than Rs.1,000. On behalf of Aristocrat, Chartered Accountant Vikash Dhanania and Authorised Representative Sumit Jaiwal appeared, arguing that PVC raincoats, which are primarily made of polyvinyl chloride (PVC), are functionally designed as protective outerwear and must be classified as articles of apparel under HSN Code 6201. The counsel cited a Customs Authority for Advance Rulings (CAAR) decision in the case of NZ Seasonal Wear Pvt. Ltd., in which comparable PVC raincoats were classified under HSN Code 6201 and recognised as textile garments according to their composition and intended purpose. The two-member bench of Tanisha Dutta, Joint Commissioner, CGST & CX, and Joyjit Banik, Additional Commissioner, SGST, remarked that PVC, being a synthetic polymer, is subject to Chapter 39 of the Customs Tariff Act 1975. The authority emphasised that the chapter notes for Section XI, which deals with textile items, exclude materials classified under Chapter 39. While the Bench in NZ Seasonal Wear (supra) relied on the raincoats' intended use and the interpretation that specific non-woven synthetic garments can still be classified as textile apparel under HSN 6201, the West Bengal AAR in this case rejected the analogy and established a clear distinction. The bench determined that PVC raincoats do not qualify as textile apparel since they are wholly made of polyvinyl chloride (PVC), which is classified under Chapter 39 of the Customs Tariff Act. The authority stated that, while PVC raincoats function as protective clothing, their composition and manufacturing method make them plastic objects rather than textile garments. In accordance with the broad Rules for the Interpretation of the Harmonized System (HSN), explicit classifications (such as plastic under HSN 3926) take precedence over broad categories (such as clothing under HSN 6201). For Official Judgement Download PDF Given Below: