2021 (9) TMI 1063 - AAR - GST

Classification of goods - Partially Coated Polyester Fabric (Knitted or Woven) or any other partially coated Fabric - whether covered under relevant chapter headings (50 to 55, 58 or 60) or under Tariff Heading 5903? - HELD THAT - Classification of goods under GST is based on HSN. The customs Tariff is based on HSN. The general Interpretative Rules are to be sequentially followed as the way to classify the goods. We are to classify within the confines of law and procedure as laid down in GST scheme of law and procedure. The Chapter notes of Custom Tariff are part and parcel of the Custom Tariff Act, 1975 which is to say, part and parcel of law enacted by the Parliament and therefore, we are obliged to follow the classification based on Chapter Notes as per law. The Explanatory notes to HSN have guidance value to classify goods. As per Rule 1 of the General Rules for the Interpretation of CTA, 1975, for legal purposes, classification shall be determined according to the terms of the headings and any Section or Chapter Notes. The subject goods have passed all the conditionality s placed in the HSN 5903 Chapter Heading description and the Chapter Notes - the subject goods have satisfied the guidelines specified in the Explanatory Notes to HSN 5903. Applicability of Board Circular dated 27-11-98 - HELD THAT - The applicant cited Board Circular dated 27-11-98 and applicant submitted that said Board Circular cannot be applied in subject matter. It is made clear that even without taking the recourse to apply the said Circular dated 27-11-98 in subject matter, we have arrived at our findings for pronouncement of our Ruling. Thus, we do not delve into the cited Madras High Court order in MADURA COATS LTD. VERSUS CBE. C., NEW DELHI 2003 (9) TMI 98 - MADRAS HIGH COURT which centres around the cited Circular dated 27-11-98. The subject goods are classified at HSN 5903.

Summary

Issues Involved:
1. Classification of partially coated polyester fabric under relevant chapter headings (50 to 55, 58 or 60) or under Tariff Heading 5903.

Issue-wise Detailed Analysis:

Issue 1: Classification of Partially Coated Polyester Fabric

Applicant's Submission:
M/s. Supercoat India supplies partially coated polyester fabric used as interlining fabric in garments. The fabric undergoes a micro-dot coating process using specific chemicals and machinery, resulting in a product partially coated on one side with scattered dots. The applicant argues that this product should not be classified under heading 5903 of the Customs Tariff Act, 1975, which deals with impregnated, coated, covered, or laminated textile fabrics. Instead, they believe it should fall under chapter headings 50 to 55, 58, or 60, specifically under chapter 54 due to the synthetic nature of the polyester fabric.

Applicant's Arguments:
1. The coating on the fabric is visible to the naked eye.
2. The fabric can be bent manually without fracturing.
3. The fabric is not completely embedded in plastic nor coated on both sides.
4. The product does not fall under heading 5811, which covers quilted textile products.
5. The fabric is partially coated and used for interlining, which does not make it impervious.

Revenue's Submission:
The Revenue contends that as per Chapter Note 2 of the Customs Tariff Act, 1975, textile fabrics impregnated, coated, covered, or laminated with plastics are covered under heading 5903.

Findings:
The Authority for Advance Ruling (AAR) examined the applicability of HSN 5903, which covers textile fabrics impregnated, coated, covered, or laminated with plastics. The key points considered were:
1. The coating on the fabric is visible to the naked eye.
2. The fabric can be bent manually around a cylinder of 7 mm diameter without fracturing.
3. The fabric is not completely embedded in plastics nor coated on both sides.
4. The fabric is partially coated on one side with scattered dots, used for interlining by applying heat and pressure.

The AAR referred to the Explanatory Notes to HSN 5903 and found that the subject goods met all the specified conditions for classification under HSN 5903. The partially coated fabric is used as interlining fabric, with the coating visible to the naked eye and capable of bonding to other fabrics under heat and pressure.

Conclusion:
The AAR concluded that the subject goods, partially coated polyester fabric, are correctly classified under HSN 5903. The ruling was based on the detailed examination of the fabric's characteristics and the manufacturing process, aligning with the guidelines specified in the Explanatory Notes to HSN 5903. The applicant's reliance on previous rulings and circulars was noted, but the AAR emphasized that advance rulings are binding only on the applicant and the concerned officer.

Ruling:
The subject goods are classified at HSN 5903.