PVC Raincoats Not Apparel, Says Gujarat AAR — Classified Under Chapter 39 (HSN 3926) And Liable To 18% GST
Sangeetha Prathap
The Gujarat Authority for Advance Ruling (AAR) has held that PVC raincoats are not textile garments but plastic articles, and therefore fall under HSN 3926, attracting 18% GST. The ruling was delivered by a bench comprising Vishal Malani (CGST Member) and Sushma Bora (SGST Member) in response to an application filed by a Gujarat-based manufacturer of PVC and plastic rainwear.
The applicant, engaged in the manufacture and trade of various types of rainwear including PVC raincoats, sought clarity on whether such raincoats should be taxed at 5% as apparel under the GST entries applicable to garments, or at 18% as articles of plastic. It was argued that raincoats are commonly understood as apparel, are worn like garments, and compete with textile raincoats in the same consumer market. The applicant contended that the functional use of raincoats as protective clothing justified classification as apparel.
The AAR examined in detail the material composition and manufacturing process of the raincoats. It noted that the applicant manufactured the products by cutting PVC plastic sheets and joining them through heat sealing, chemical bonding or stitching, but not by weaving or knitting any textile fabric. The Authority observed that PVC sheets are not textile fabric and that the finished raincoat is essentially a shaped plastic article. It further found that the raincoats are made entirely from plastic sheets without any process that would convert them into textile garments.
The bench relied on the tariff structure and explanatory notes to the Customs Tariff Act. It noted that Chapter 39 specifically covers “articles of plastics,” and the explanatory notes clarify that garments and clothing accessories made by sealing sheets of plastics fall within this category unless the garments are made of textile material. The AAR further referred to Note 2(p) of Chapter 39, which excludes from that chapter only those garments made of textile materials. Since PVC raincoats are not made from textile fabric, the Authority held that they cannot fall under Chapters 61 or 62, which deal with knitted or woven apparel.
Rejecting the applicant’s submission that raincoats should be treated as apparel because they are worn on the body, the AAR held that functional use alone cannot determine classification. The decisive factor is the material composition. The ruling states that the product is “manufactured from PVC/plastic sheets” and that “the process of heat sealing/chemical bonding of plastic sheets does not convert the goods into textile apparel.” Consequently, the Authority concluded that the correct classification is HSN 3926 20 90, covering “other articles of plastic.”
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Accordingly, the Authority ruled that PVC raincoats attract 18% GST under Entry 111 of Schedule III of Notification No. 1/2017-Central Tax (Rate) and not the 5% rate applicable to apparel. The applicant’s request for classification under apparel entries was therefore rejected.
Applicant's Name: Pradeepkumar Gaurishankar Trivedi
