Aluminium Foil Container is classified under Heading 7615 with a GST rate of 12%

The Madras High Court has ruled that aluminium foil containers should be classified under Chapter Heading 7615 of the Customs Tariff Act, meaning they are subject to a 12% Goods and Services Tax (GST) rate. This decision overturns the revenue authority's attempt to classify them under Heading 7607 with an 18% tax rate. The court referenced previous Supreme Court rulings and clarified that GST classification relies on the Customs Tariff Act.

The Hon'ble Madras High Court in M/s. Veeram Natural Products v. The Additional Commissioner of GST and Central Excise [W.P.(MD) Nos.6485 to 6492 of 2023 dated September 13, 2023] held that aluminium foil container should be classified under Chapter Heading 7615 under the Customs Tariff Act, 1975 ("the Customs Tariff Act")with a GST rate of 12%.

Facts

M/s. Veeram Natural Products ("the Petitioner") is a partnership firm involved in the production and supply of Aluminium Foil Containers and Aluminium Foil in Roll Form, along with Plastic Articles. In the pre-GST era, these products were subject to taxation under the Central Excise Law, categorized under Chapter heading 7607 and levied duty @ 12.5%. However, under the GST regime, the Petitioner classified them under 7615 with a 12% GST rate. Disagreements arose as the revenue authority("the Respondents") insisted on classifying them under 7607 with an 18% tax rate and hence, order bearing no. 13-19/2020 dated October 28, 2020 ("the Impugned Order") was issued.

The Petitioner further contended that their Aluminium Foil Containers are primarily used for packaging and serving food items, hence their classification under Chapter Heading 7615 under the Customs Tariff Act.

Conversely, the Respondents classified them under Chapter Heading 7607, defining them as Aluminium foil (with or without printing, backed with paper, paperboard, plastics, or similar materials) with a thickness (excluding any backing) not exceeding 0.2 mm.

Issue

Whether Aluminium Foil Containers classified under Chapter Heading 7615 or 7607?

Held

The Hon'ble Madras High Court in W.P.(MD) Nos.6485 to 6492 of 2023, held as under:

• Determined that GST taxation is linked to the "supply" of goods and services, as defined by Sections 7 and 9 of the Central Goods and Services Tax Act, 2017 ("the CGST Act"). They pointed to Notification No. 01/2017-Central Tax (Rate) dated June 28, 2017, which specifies the Central Tax rates for the intra-state supply of certain goods based on their chapter headings. For classifying such goods in the GST regime and the Customs Tariff Act is referenced.
• Determined that the classification dispute regarding the product Aluminium Foil Containers had already been settled in favour of the petitioner by the Hon'ble Supreme Court in the case of Hindalco Industries Limited Vs. CCE 2009 (237) ELT 588.
• Concluded that the Aluminium Foil Container should be classified under Chapter Heading 7615 under the Customs Tariff Act with a GST rate of 12%, and consequently, the Impugned Order should be quashed.
• However, the petitioner has already paid tax for the month of July 2017 to November 2017 at 18%, which is accumulated credit available with them. However, the court decided not to address the refund issue as it has to be considered on various factors. The matter of a refund was left open for future resolution in accordance with the relevant legal provisions.
• Hence, under the given observations and directions, these writ petitions are allowed.