2023 (6) TMI 421 - AT - Customs

Classification of imported goods - Non-Texturised Polyster Lining Fabric - to be classified under the Chapter Heading No.5903 or as Umbrella Panel Fabrics classifiable under Chapter Heading 5407? - provisional release of seized goods on execution of bond and Bank Guarantee. HELD THAT - The Commissioner has classified the goods under the CTH 5903 on the basis of Chapter Note 2 (a)(1) of Chapter 5903 - the Commissioner has arrived at the conclusion on the basis of the two Test Reports received from IIT Delhi and Textile Committee. The Report received from RLTC indicate that the fabrics are coated and the coating can be seen with naked eye other than change in colour. The contention of the Department is that as per Chapter Note 2(a)(1) fabrics coated with plastics only are covered under the Chapter heading 5903 and in the instant case, the Test Reports of RLTC and IIT Delhi clearly indicates that the impugned fabrics are not coated with plastics. The Test report of IIT Delhi clearly indicates that the fabrics are coated with Aluminium paste. The RLTC report also indicate that the fabric are coated with silver. Accordingly, the Department contended that once the fabric are not coated with plastics, whether it can be seen with naked eyes are not, is immaterial, and the goods cannot be classified under the Chapter Heading 5903 - there are merit in the argument of the Department. Chapter Note 2(a) of Heading 5903 applies to textile fabrics, impregnated, coated, covered or laminated with plastics. According to the Principle of Ejusdem generis, when a general word follows some specified words, then the general words will have the same meaning as that of the specified words. By applying this Principle of ejusm genris, the interpretion of the above Chapter Note is that the textile fabrics impregnated with plastic, coated with plastic, covered with plastic and laminated with plastic are covered under the Chapter Heading 5903. The end use of a product cannot necessarily be the determining factor for classification of the goods as held by the Hon ble Supreme Court in the case of Indian Aluminium Cables vs UOI 1985 (5) TMI 54 - SUPREME COURT - the Department proposed to classify the goods under the CTH 5407 only on the basis of end use. End use of a product cannot be a criteria for classification. However, as held by the Hon ble Supreme court in the case of Indian Aluminium Cables vs UOI, end use alone cannot determine the classification. The other parameters such as the nature of cloth, nature of coating etc are required to be ascertained to classify the fabrics. The goods are not classifiable under CTH 54071094 as proposed by the Appellant - Appeal of Revenue dismissed.

Summary

Issues Involved:
1. Classification of imported goods.
2. Validity of test reports.
3. Applicability of Chapter Notes and General Rules of Interpretation.
4. Determination of end use for classification.
5. Admissibility of new classification claims during appeal.

Summary:

1. Classification of Imported Goods:
The Respondent imported Non-Texturised Polyester Lining Fabric, classifying it under Chapter Heading 5903. Upon examination, Customs found the goods to be 'Umbrella Panel Fabrics' classifiable under Chapter Heading 5407, leading to their seizure and provisional release.

2. Validity of Test Reports:
Samples were tested by IIT Delhi and RLTC, which confirmed the fabric was coated and the coating visible to the naked eye. IIT Delhi's report indicated the coating was with water repellant and UV proof substances, while RLTC could not ascertain the coating's nature or end use.

3. Applicability of Chapter Notes and General Rules of Interpretation:
The Adjudicating Authority classified the goods under CTH 5903, based on visible coating as per Chapter Note 2(a) to Chapter 5903. The Commissioner referenced Supreme Court decisions, emphasizing that the end use is not a determining factor for classification.

4. Determination of End Use for Classification:
The Department argued that the goods should be classified under CTH 5407 due to their use in making umbrella panels. However, the Tribunal agreed with the Respondent that the end use alone cannot determine classification, aligning with the Supreme Court's stance in Indian Aluminium Cables vs UOI.

5. Admissibility of New Classification Claims During Appeal:
The Tribunal noted that the RLTC report lacked details on whether the fabrics were made from high tenacity yarn, essential for classification under Chapter 5407. It reiterated that classification based on end use is inappropriate and upheld the classification under Chapter 59, as the coating was visible to the naked eye.

Conclusion:
The Tribunal found merit in the Department's argument that the primary requirement for classification under Chapter 5903 is coating with plastics. However, due to the lack of evidence that the fabrics were coated with plastics, the goods could not be classified under CTH 5903. The Tribunal rejected the Department's appeal for classification under CTH 54071094, maintaining the classification under Chapter 59 and dismissing the charges against the importer.