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2021 (12) TMI 116 - AAAR - GSTClassification of goods - narrow woven fabrics manufactured - classifiable under Tariff Heading No. 58063990 or otherwise? - HELD THAT - To classify the product under HSN code 5806 as narrow woven fabric , its width should not exceed 30 cm and it should have selvedges (flat or tubular) on both edges. The width of the fabric was never in question and from the forgoing paras, it is clear that the product is provided with selvedges on both sides - the product in question satisfy the conditions of narrow woven fabric mentioned in Chapter Note 5 of Chapter 58 of Customs Tariff Act, 1975. The product is to be classified under CTH No. 58063990 and not under CTH No. 54071019 of the Customs Tariff Act, 1975. The product narrow woven fabric of Polypropylene yarn of width not exceeding 30 cms provided with selvedges on both edges manufactured by the appellant merit classification under Tariff heading No. 58063990 of the Customs Tariff Act, 1975, attracting rate of GST @5% or 5% IGST as per Sl. No. 219AA of Schedule-I of Notification No. 1/2017-CT (Rate) dated 28.06.2017 (as amended) and Notification No. 1/2017-IGST (Rate) dated 28.06.2017. Advance ruling modified.
Issues: Classification of narrow woven fabrics under Tariff Heading No. 58063990
Issue 1: Classification of narrow woven fabrics The appellant, engaged in manufacturing narrow woven fabrics, sought an advance ruling on the classification of their product under Tariff Heading No. 58063990. The Gujarat Authority for Advance Ruling (GAAR) initially classified the product under sub-heading No. 5407.10.19 of the Customs Tariff Act, 1975. The GAAR based its decision on the absence of selvedges on both edges of the fabric, as per Chapter Note 5 of Chapter 58 of the Customs Tariff Act, 1975. This classification attracted a tax rate of 2.5% CGST + 2.5% SGST for intra-state supply or 5% IGST for inter-state supply. Analysis: The GAAR ruled that the narrow woven fabrics, made of polyester yarn but lacking selvedges on both edges, should be classified under a different sub-heading. The appellant, however, argued that their product, woven from polypropylene yarn, did have selvedges formed during the weaving process itself. The appellant contended that the GAAR's ruling was based on incorrect observations and did not consider the manufacturing process adequately. The appellant provided samples of the fabric as evidence. Issue 2: Interpretation of Customs Tariff Act, 1975 The Gujarat Appellate Authority for Advance Ruling analyzed the definitions and requirements for narrow woven fabrics under the Customs Tariff Act, 1975. Chapter Note 5 of Chapter 58 specified that narrow woven fabrics should have a width not exceeding 30 cm and selvedges on both edges. The appellant claimed that their product met these criteria and should be classified under Tariff Heading No. 58063990. Analysis: The Appellate Authority examined the relevant chapter notes and headings to determine the appropriate classification of the narrow woven fabrics. They noted that the product should meet the criteria of width and selvedges as per Chapter Note 5. The Authority found that the appellant's product satisfied these conditions and should indeed be classified under CTH No. 58063990, attracting a tax rate of 5% CGST + 5% SGST or 5% IGST. Conclusion: The Appellate Authority modified the initial ruling by the GAAR and held that the narrow woven fabrics manufactured by the appellant, made of polypropylene yarn with selvedges on both edges, should be classified under Tariff Heading No. 58063990 of the Customs Tariff Act, 1975. The product was deemed to meet the criteria for narrow woven fabrics, as defined in Chapter Note 5, and was subject to the appropriate GST rates as per the notifications issued under the GST regime.
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