TRU Can’t Issue Clarification Regarding Classification Of Polypropylene Woven And Non-Woven Bags Under Customs Tariff Act, 1975: Delhi High Court

The Delhi High Court has held that the Tax Research Unit (TRU) cannot issue clarification regarding the classification of polypropylene woven and non-woven bags under the Customs Tariff Act, 1975.

The bench of Justice Yashwant Varma and Justice Dharmesh Sharma has observed that the department could not point out any provision of the CGST Act, in terms of which the TRU could be said to have been clothed with the authority or jurisdiction to render a clarification with respect to the classification of goods and articles. The Board appears to be the sole recipient of the authority. There is no authority vested in the TRU to issue the clarification.

The petitioner/assessee is an association of technical textile manufacturers. The petitioners challenged the Circular dated December 31, 2018 issued by the Tax Research Unit, to the extent that it purports to clarify that polypropylene-woven and non-woven bags, including those laminated with biaxially oriented polypropylene, are liable to be classified as falling under Chapter 39, and more particularly Tariff Heading 3923, which forms part of the First Schedule to the Customs Tariff Act, 1975.

The petitioner contended that the power to issue orders, instructions, or directions to Central Tax Officers is exclusively vested in the Central Board of Indirect Taxes and Customs. No power is conferred upon the TRU.

The court held that in the absence of conferral of any power upon the TRU or it is recognized as being statutorily enabled to issue any clarification or directive under Section 168 of the CGST Act, the circular is liable to be quashed and set aside on this ground alone.

Counsel For Petitioner: V. Lakshmikumaran and Kunal Kapoor

Counsel For Respondent: Shubhra Parashar

Case Title: Association Of Technical Textiles Manufacturers And Processors & Anr. Versus UOI

Citation: 2023 LiveLaw (Del) 1131

Case No.: W.P.(C) 5933/2019

Click Here To Read The Order