AAAR Gujarat Holds Geomembranes Classifiable as Textile Products Under HSN 5911, Upholds Advance Ruling Authority’s Decision

Background and Issue
The present appeal before the Appellate Authority for Advance Ruling (AAAR), Gujarat, was filed by the Deputy Commissioner, Central GST, challenging the Advance Ruling No. GUJ/GAAR/R/2022/46, which classified geomembranes manufactured by Shree Ambica Geotex Pvt. Ltd. under HSN 5911 as textile products for technical uses. The department contended that such geomembranes, made from HDPE strips, should instead be classified under HSN 3926 as articles of plastics.

Manufacturing Process and Product Description
The respondent manufactures geomembranes using HDPE granules and master batch, which are processed into tapes/strips of less than 5mm width. These are woven into uncoated fabrics, which are then laminated with LDPE/LLDPE and further processed to create waterproof geomembranes. The final product is used primarily for technical purposes, such as lining aquaculture ponds.

Advance Ruling Authority’s Findings
The Advance Ruling Authority had held that geomembranes merit classification under HSN 5911, specifically tariff item 59111000, as textile products coated or laminated with plastic for technical uses. The authority reasoned that the manufacturing process results in a textile article, and that the technical use and construction of the product align with the requirements of Chapter 59, Note 7(1)(a), and Section XI of the HSN. The authority also relied on Supreme Court and High Court precedents, as well as previous advance rulings.

Department’s Appeal and Submissions
The department argued that similar products had previously been classified under HSN 3926 by other authorities and courts, including the Madhya Pradesh High Court and the Customs Authority for Advance Ruling. The department also cited the Tribunal’s decision in Gujarat Raffia Industries Ltd. and the Rajasthan High Court’s decision in Rajasthan Synthetic Industries Ltd., both of which classified similar products as articles of plastics.

Respondent’s Submissions
The respondent countered that the Gujarat High Court, in Ananta Synthetic Innovations, had already settled the issue by holding that geomembranes are textile products under HSN 5911. The respondent further relied on the Supreme Court’s decision in Porritts & Spencer (Asia) Ltd. and the Gujarat High Court’s decision in CTM Technical Textiles Ltd., both of which recognized woven fabrics as textiles regardless of the material used.

AAAR’s Reasoning and Decision
The AAAR carefully reviewed the manufacturing process and found it identical to that considered by the Gujarat High Court in Ananta Synthetic Innovations. The authority noted that the High Court had conclusively held that such geomembranes are classifiable under Chapter 59, not Chapter 39, and that no appeal had been filed against this decision, rendering the issue final.

The AAAR also addressed the department’s reliance on contrary decisions, clarifying that the Gujarat High Court had distinguished the Madhya Pradesh High Court’s ruling in Raj Packwell Ltd. as not applicable to woven fabrics. The authority emphasized that it was bound by the jurisdictional High Court’s decision, which took precedence over other authorities and tribunals.

Conclusion
In light of the settled legal position established by the Gujarat High Court, the AAAR upheld the Advance Ruling Authority’s decision classifying geomembranes under HSN 5911 as textile products for technical uses. The department’s appeal was accordingly rejected.