2024 (9) TMI 1204 - AAR - GST

Classification of goods - nonwoven coated fabrics-coated laminated or impregnated with PVC - to be classified under HSN 56031400 or under Chapter 50 or under Chapter 39? Whether the goods nonwoven coated fabrics-coated laminated or impregnated with PVC are classifiable under tariff item 56031400 or not? - HELD THAT - A conjoint reading of the manufacturing process the section notes chapter notes etc leads to a conclusion that the nonwoven coated fabrics-coated laminated or impregnated with PVC will not fall under chapter 56. If the product non-woven coated fabrics-coated laminated or impregnated with PVC does not fall under tariff item 56031400 then whether it will fall under chapter 50? - HELD THAT - On going through the HSN explanatory notes of chapter 50 we find that generally speaking chapter 50 covers silk including mixed textile materials classified as silk at its various stages of manufacture from the raw material to the woven fabrics. It also includes silk worm gut. The applicant s product non-woven coated fabrics-coated laminated or impregnated with PVC is a combination of nonwoven fabrics adhesive coat and PVC sheet thereby not meeting the primary requirement for falling under chapter 50. Whether the product nonwoven coated fabrics-coated laminated or impregnated with PVC would fall under which heading of chapter 39? - HELD THAT - Since the product of the applicant is a mixture of various constituents as is already mentioned the product is to be classified as if they consisted of the material or component which gives them their essential character in so far as this criterion is applicable. It is already stated that the major constituent is PVC sheet which is 120 GSM out of the total 240 GSM. Therefore the goods of the applicant viz nonwoven coated fabrics-coated laminated or impregnated with PVC would fall under chapter 39.

Issues Involved:
1. Classification of "nonwoven coated fabrics-coated, laminated or impregnated with PVC" under HSN 56031400.
2. Classification of the product if it does not fall under HSN 56031400, specifically under Chapter 50.
3. Classification of the product if it does not fall under HSN 56031400, specifically under Chapter 39.

Detailed Analysis:

Issue 1: Classification under HSN 56031400
The applicant contended that their product, "nonwoven coated fabrics-coated, laminated or impregnated with PVC," should fall under HSN 56031400. However, the authority found that the product does not meet the criteria for classification under Chapter 56 due to the following reasons:
- Note 1(h) of Section XI of the Customs Tariff Act, 1975, excludes woven, knitted, or crocheted fabrics, felt or nonwovens impregnated, coated, covered, or laminated with plastics from being classified under Chapters 50 to 63.
- Chapter Note 3 of Chapter 56 specifies that nonwovens impregnated, coated, covered, or laminated with plastics or rubber containing 50% or less by weight of textile material or felt completely embedded in plastics are excluded from this chapter. The product in question contains only 40 GSM of nonwoven fabric out of a total of 240 GSM, thus falling below the 50% benchmark.
- The HSN notes of Chapter 56 state that nonwovens covered with other materials are classified under this heading only if they derive their essential character from the nonwoven. Since nonwoven constitutes only 16% of the product, it cannot be said to derive its essential character from the nonwoven.

Issue 2: Classification under Chapter 50
The applicant's second contention was whether the product could fall under Chapter 50 if it does not fall under HSN 56031400. The authority examined this claim and found that Chapter 50 generally covers silk and mixed textile materials classified as silk. Since the applicant's product is a combination of nonwoven fabrics, adhesive coat, and PVC sheet, it does not meet the primary requirement for classification under Chapter 50.

Issue 3: Classification under Chapter 39
The third issue was whether the product could be classified under Chapter 39. The authority noted that the product is used as table covers, TV covers, washing machine covers, and for making bags. Applying General Rules of Interpretation, the authority found that:
- Rule 3(b) states that mixtures or composite goods should be classified as if they consisted of the material or component that gives them their essential character. The major constituent of the product is PVC sheet, which is 120 GSM out of the total 240 GSM.
- Therefore, the product "nonwoven coated fabrics-coated, laminated or impregnated with PVC" would fall under Chapter 39.

For specific items:
- Bags would be classified under tariff item 3923, attracting 18% GST, as clarified by CBIC Circular No. 80/54/2018-GST dated 31.12.2018.
- Table covers, TV covers, and washing machine covers would fall under tariff item code 392690, also attracting 18% GST.

Ruling:
1. The "nonwoven coated fabrics-coated, laminated or impregnated with PVC" will not fall under tariff item 56031400.
2. The "nonwoven coated fabrics-coated, laminated or impregnated with PVC" will not fall under Chapter 50.
3. The "nonwoven coated fabrics-coated, laminated or impregnated with PVC" will fall under Chapter 39. Specifically, table covers, TV covers, and washing machine covers will fall under tariff item 392690 and attract 18% GST, while bags will be classified under tariff item 3923 and attract 18% GST.

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