West Bengal AAR Clarifies HSN Classification of PP Packing Boxes Under GST Law

Background and Application
The applicant, engaged in the manufacture and supply of polypropylene (PP) packing boxes, sought an advance ruling from the West Bengal Authority for Advance Ruling (AAR) regarding the correct Harmonized System of Nomenclature (HSN) classification for its products under the Goods and Services Tax (GST) regime. The applicant had been classifying the PP packing boxes under HSN Code 392390 and charging GST at 18% (9% CGST and 9% SGST) as per the prevailing rate notification. The application was filed to obtain clarity on the precise HSN code applicable to the PP packing boxes to ensure proper compliance.

Applicant’s Submissions
The applicant described its manufacturing process, which involves using plastic granules processed through semi-automatic machines to produce PP packing boxes. The applicant submitted that the products are currently classified under HSN Code 392390, falling within Chapter 39 of the Customs Tariff, which covers articles for the conveyance or packing of goods of plastics, including stoppers, lids, caps, and other closures. The applicant emphasized that there was no dispute regarding the applicable GST rate but sought confirmation of the correct HSN code for clarity and compliance.

Revenue’s Position
The concerned revenue officer did not raise any objection to the admission of the application and did not provide any substantive submission on the merits of the classification issue.

Authority’s Observations and Legal Reasoning
The AAR examined the manufacturing process, product invoices, and photographs submitted by the applicant. The Authority noted that the applicant’s products are manufactured from polypropylene, a polymer classified under heading 3902 of Chapter 39 of the Customs Tariff Act, 1975. The Authority referred to Chapter Note 1 of Chapter 39, which defines plastics and their qualifying characteristics, and found that the applicant’s manufacturing process and materials align with these requirements.

The Authority then analyzed the relevant tariff headings. It observed that tariff heading 3923 covers ‘Articles for the conveyance or packing of goods, of plastics; stoppers, lids, caps and other closures, of plastics.’ Within this heading, subheading 392310 pertains to boxes, cases, crates, and similar articles. Upon reviewing the specific tariff items under 392310, the Authority determined that the applicant’s PP packing boxes do not fall under the more specific items (39231010, 39231020, 39231030, or 39231040) but are appropriately classified under tariff item 39231090. Additionally, the lids, caps, and covers supplied with the boxes are to be classified under tariff item 39235090.

The Authority further confirmed that, as per Notification No. 01/2017 – Central Tax (Rate) dated 28.06.2017 (as amended), subheading 3923 is included in Schedule II at serial no. 124, attracting GST at the rate of 9% CGST and 9% SGST.

Ruling and Conclusion
The West Bengal AAR ruled that PP packing boxes manufactured by the applicant are to be classified under tariff item 39231090, and the lids, caps, and covers are to be classified under tariff item 39235090. This classification aligns with the Customs Tariff Act and the relevant GST notifications, ensuring that the correct HSN codes are applied for GST compliance.

This ruling provides clarity for manufacturers and suppliers of PP packing boxes regarding the appropriate HSN classification and applicable GST rates, thereby facilitating proper tax compliance and reducing classification disputes under the GST regime.