2023 (9) TMI 1196 - AAR - Customs

Classification of goods proposed to be imported - Rolls made of Polyester, Taffeta, Satin etc. which are available with width ranging from 10 millimetre to 810 millimetre - to be classified under HSN Code 5807 or not - products are covered by Entry No. 147 of Notification No. 82/2017-Cus., dated 27-10-2017 and Entry No. 153 of Schedule II of Notification No. 1/2017-IGST (Rate), dated 28 June, 2017 or not - what is the basic Customs duty under First schedule of the Customs Tariff Act, 1975 and IGST rate under sub-section (7) of Section 3 of the said Customs Tariff Act read with Notifications issued on import of the products? HELD THAT - From the descriptions of the products, it is found the same are of various type having sizes ranging from 10 mm to 305 mm, whereas in the CAAR-I application the applicant had mentioned sizes ranging from 10 mm to 810 mm. However, there is only one item in the list of products having width exceeding 300 mm, namely Iron on Taffeta Roll - 305 mm . It is submitted by applicant that the CTH 5807 10 does not require a label to be printed for classification under the heading. Further, there is no such requirement in the chapter and section notes. In support of this argument the applicant has further submitted that the Hon ble Calcutta High Court in the case of BIJAY KUMAR PODDAR VERSUS UNION OF INDIA 1999 (9) TMI 106 - HIGH COURT AT CALCUTTA has held the plain label strips as labels considering that it is meant for printing and there is no alternate use of the same. The related sub-heading 5807 provides and covers labels and similar articles - Honourable High Court has further opined that the CTH 5807 10 provides and covers labels and similar articles. Notwithstanding whether the imported goods came with printing on it or not then also, the Court held that, if it is not label in strict sense then also the material imported can be said similar to label - Applying the same ratio, the product commonly identified by the section of people dealing in or using the same would be known as Label due to its functional character. Further, due to the exclusion clause the said label or similar articles in strip would not be covered under Heading 58.06. Various Courts in a plethora of cases have held that HSN explanatory notes have a persuasive effect in deciding the matters of classification. Keeping in view the observation of Apex Court in various decisions referred in forgoing paras as well as the decision of High Court decision in case of M/s. Bijay Kumar Poddar v. Union of India, it is found that the said products have to be considered as articles similar to labels of textile materials in strips and accordingly are classifiable under heading CTH 58.07. The products as detailed in Table-A merit classification as articles similar to label of textile material in strips under Heading 58.07 and specifically under sub-heading 5807 10 20 of the First Schedule to the Customs Tariff Act, 1975.

Summary

Issues Involved:
1. Classification of the proposed import of Rolls made of Polyester, Taffeta, Satin, etc.
2. Applicability of tariff entry and Customs/IGST notifications on the products proposed to be imported.
3. Determination of basic Customs duty and IGST rate on the imported products.

Issue-wise Detailed Analysis:

1. Classification of the proposed import of Rolls made of Polyester, Taffeta, Satin, etc.:
The applicant, engaged in the business of purchase and sale of products in India, proposed to import rolls made of Polyester, Taffeta, Satin, etc., with widths ranging from 10 mm to 810 mm. The applicant sought to classify these products under HSN Code 5807 10, arguing that the products are known as labels in common parlance and trade, with no alternate use except as labels. The jurisdictional Commissionerate, however, opined that the products do not qualify as labels under CTH 5807 10 since they do not bear individual inscriptions or motifs and are in running lengths without regular cut markings. Instead, the Commissionerate suggested classification under CTH 5806 32 00 for products made of man-made fibers and narrow woven fabrics of a width not exceeding 30 cm.

2. Applicability of tariff entry and Customs/IGST notifications on the products proposed to be imported:
The applicant argued that the products should be classified under CTH 5807 10 and be subject to Customs duty under Entry No. 147 of Notification No. 82/2017-Cus. and IGST under Entry No. 153 of Schedule II of Notification No. 1/2017-IGST (Rate). However, the jurisdictional Commissionerate noted that Notification No. 82/2017 had been rescinded w.e.f. 1-5-2022, making Entry No. 147 inapplicable. The Commissionerate also stated that since the goods do not fall under CTH 5807 10, Entry No. 153 of Schedule II of Notification No. 1/2017-IGST (Rate) is not applicable.

3. Determination of basic Customs duty and IGST rate on the imported products:
For narrow woven fabrics made of man-made fibers, the total duty rate was determined to be 28.10% (BCD: 20% + SWS: 10% + IGST: 5%). For woven fabrics other than narrow woven fabrics, the basic Customs duty and IGST rate would vary based on the composition and characteristics of the items imported. The applicant countered that the rolls should be classified under CTH 5807 10, subject to a basic Customs duty of 10% and IGST of 12% under Entry 153 of Schedule II of Notification No. 1/2017-IGST (Rate).

Judgment:
The Authority for Advance Rulings examined the contentions and submissions, including the jurisdictional Commissionerate's comments and the applicant's rejoinder. The Authority referred to HSN Explanatory notes and relevant case laws, including the Hon'ble Calcutta High Court's decision in M/s. Bijay Kumar Poddar v. Union of India, which held that plain label strips meant for printing with no alternate use should be classified under CTH 5807. The Authority concluded that the products in question, being similar to labels of textile materials in strips, merit classification under Heading 58.07, specifically under sub-heading 5807 10 20 of the First Schedule to the Customs Tariff Act, 1975. The effective rate of duty would be 16.5% (BCD: 10% + SWS: 10% + IGST: 5%), and the applicable notifications and rates of duty would follow as discussed.

Ruling:
The products detailed in Table-A are classified as articles similar to labels of textile material in strips under Heading 58.07, specifically under sub-heading 5807 10 20. The issues of operation of notifications and rate of duty will be applicable as discussed in the judgment.