2024 (1) TMI 974 - AAR - GST

Classification of Rolls made of Polyester, Nylon Taffeta, Satin etc. which are available with width ranges from 10 millimeter to 810 millimeter with printable feature - Rate of IGST - to be classified under CTH 580710 of the First Schedule to the Customs Tariff Act, 1975 or not - entry no. 153 of Schedule II of Notification 1/2017 -IGST (Rate) 28 June 2017 - HELD THAT - The HSN Explanatory notes to CTH 58.07, subject to the conditions specified, cover the labels of any textile material. These include labels of a kind used for marking wearing apparel, household linen, mattresses, tents, soft toys, or other goods. They are utilitarian labels bearing individual inscriptions or motifs. Such labels include, inter alia, commercial labels bearing the trade name or trade mark of the manufacturer or the nature of the constituent textile ( silk', viscose rayon , etc.) and labels used by private individuals (boarding school pupils, soldiers, etc.) to identify their personal property; the latter variety sometimes bear initials or figures or comprise sometimes a framed space to take a hand written inscription. Condition that these products must not be embroidery. Goods will not have embroidery on them. Due to this explanation in the HSN explanatory notes the proposed imports will get covered under exclusion clause of CTH 5806. In the instant case the goods will be imported without printing of labels on them. Applicant has argued that the textiles labels printed or otherwise are classifiable under HSN 5807 10. 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 BIJAY KUMAR PODDAR VERSUS UNION OF INDIA 1999 (9) TMI 106 - HIGH COURT AT CALCUTTA , 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 58.07.1 do not find any grounds to disagree with the High Court decision in case of M/s Bijay Kumar Poddar vs Union of India on the issue of classification in the instant case. Thus, the Rolls made of Polyester, Nylon Taffeta, Satin etc. which are available with width ranges from 10 millimeter to 810 millimeter with printable feature more specifically described in Table 'A' (supra) collectively referred to as 'Products' proposed to be imported by the applicant merit classification as articles similar to label of textile material in strips under CTH 5807 specifically under sub-heading 5807 1020 of the First Schedule to the Customs Tariff Act, 1975 and also said 'products' are classifiable at 8-digit level under CTH 5807 1010 (Of cotton), 5807 1020 (Of man-made fibre) 58071090 (Other) according to their composition and characteristics and said 'products' are covered by entry no. 153 of Schedule II of Notification 1/2017 - IGST (Rate) 28 June 2017.

Summary

Issues Involved:
1. Classification of Rolls made of Polyester, Nylon Taffeta, Satin, etc.
2. Applicable IGST rate for the imported products.

Issue 1: Classification of Rolls made of Polyester, Nylon Taffeta, Satin, etc.
The applicant, M/s. Mean Light Co., sought an advance ruling on the classification of various rolls made of polyester, nylon taffeta, satin, etc., which are available in widths ranging from 10 millimeters to 810 millimeters. The applicant proposed that these products be classified under CTH 580710 of the First Schedule to the Customs Tariff Act, 1975, which attracts a customs duty of 10%.

The applicant argued that the products are labels or similar articles of textile materials in strips, used for marking wearing apparel and other goods. They cited various case laws, including the ruling in the case of M/s. Mahaveer Impex and the decision of the Calcutta High Court in the case of M/s. Bijay Kumar Poddar vs Union of India, which supported the classification under CTH 580710.

The Chennai Customs House, however, contended that the products in roll form do not have inscriptions or motifs to qualify as labels and suggested alternative classifications under headings 5806, 5407, 5512, 5903, 6003, 6005, or 6006, depending on the nature of the fabric and its coating.

Issue 2: Applicable IGST Rate
The applicant also sought clarification on the applicable IGST rate for the imported products. They proposed that the products fall under entry no. 153 of Schedule II of Notification 1/2017 - IGST (Rate) dated 28 June 2017, which prescribes an IGST rate of 12% for goods falling under HSN 5807.

Judgment Summary:
The Customs Authority for Advance Rulings (CAAR) examined the arguments and submissions made by the applicant and the response from the Chennai Customs House. The CAAR referred to the HSN Explanatory Notes to CTH 5807, which cover labels of any textile material, including those used for marking wearing apparel and other goods, provided they are not embroidered. The CAAR also considered the exclusion clause under CTH 5806, which excludes narrow woven fabrics more specifically covered by other headings, such as woven labels.

The CAAR concurred with the applicant's submissions and the ruling in the case of M/s. Mahaveer Impex, concluding that the products in question are classifiable under sub-heading 5807 1020. The CAAR ruled that the products are articles similar to labels of textile materials in strips and are correctly classified under CTH 5807 1020. The CAAR also confirmed that the products are covered by entry no. 153 of Schedule II of Notification 1/2017 - IGST (Rate) 28 June 2017, attracting an IGST rate of 12%.

Conclusion:
The CAAR ruled that the Rolls made of Polyester, Nylon Taffeta, Satin, etc., available in widths ranging from 10 millimeters to 810 millimeters, are classifiable under sub-heading 5807 1020 of the First Schedule to the Customs Tariff Act, 1975, and are covered by entry no. 153 of Schedule II of Notification 1/2017 - IGST (Rate) 28 June 2017, with an IGST rate of 12%.