Classification of HDPE/PP Woven fabrics coming out of Circular looms whether running in length or in cut-pieces - Central Excise - 28/MMF/88-CX.1

Classification of HDPE/PP Woven fabrics coming out of Circular looms whether running in length or in cut-pieces Circular No. 28/MMF/88-CX.1 Dated 18-11-1988 [From F. No. 63/6/88-CX.1] Government of India Ministry of Finance (Department of Revenue) New Delhi Subject : Classification of HDPE/PP Woven fabrics coming out of Circular looms whether running in length or in cut-pieces. A doubt has arisen whether tubular HDPE Woven Fabrics coming out of the circular loom will be falling under Ch. 54.8 before lamination or under heading 58.06 as special woven fabrics or under sub-heading 63.01 as made up textile articles not elsewhere specified. The doubt arose on the ground that as per the rule 2(a) of the Rules of Interpretation i.e. any reference in a heading to goods shall be taken to include reference to those goods incomplete or unfinished provided that the incomplete and unfinished goods have the essential character of the complete or finished goods. It is argued by Collectors that the Circular looms are designed and meant only for the manufacture of woven sacks. The diameter of the woven tubular form is the normal diameter of sacks. The said woven tubular material manufactured on circular looms if not used for any purpose other than the manufacture of sacks. 2. The trade has pointed out the HDPE/PP strips/tapes are woven into fabrics on warp and weft circular or flat looms as the case may be, to obtain fabrics. In case of sacks required for Fertilizer Industries, the circular fabrics are cut to required sizes and are stitched at the bottom and hemmed at the mouth, if so required. In case of sacks used in Cement Industry, there is stitching at both ends, with a value formation. If the customer wishes to purchase flat fabrics, the tubular fabrics are slitted before winding on rolls. They have further pointed out that the woven fabrics on circular looms by themselves cannot be called sacks, because at that stage the product remains as fabrics and does not acquire the essential and functional characteristics of sacks namely the capacity to hold material inside. These characteristics of sacks cannot be said to have been achieved at loom stage itself, by calling it a giant size sacks as is done by the Department. It is represented that such understanding by the Department ignores the reality. The expression "made up textile articles" (which is the subject matter of levy under 6301.00) is defined in Note 5 of Section XI of the Schedule to the C.E.T. Act, 1985. The condition laid down is that it must be ready for use or merely need separation by cutting, dividing threads, without sewing or other working etc. Thus that is required is that the product or article must be ready for use without sewing which is not the position in case of HDPE/PP woven tubular fabrics. In fact, clause (e) of the said definition requires sewing as an essential process to call an article or product a 'made up' article. 3. The reports received from the Collectors indicate that in all Collectorates except Bangalore the classification of HDPE tubular fabrics manufactured out of circular looms is under heading 54.08. In this regard some Collectors are of the view that fabrics in tubular form are not sacks because their end use for manufacture of sacks does not always appear to be correct or in consonance with the principle followed for classifying numerous other products. Most of the fabrics used for manufacture of hosiery items are in tubular form and such fabrics are not classified on the basis of end use but are regarded as fabrics because of their surface area and width, whether, woven, knitted or crocheted. A fabric is a fabric whatever be its end use. Unless there is a warrant in the Chapter Notes, heading, or the words of the description, it would not be advisable to import the concept of end use in any particular chapter of the Tariff where some headings are based on composition and identity. The tubular fabric is, thus, a fabric but in tubular form. 4. A view is also expressed that the said product may merit classification under 58.06 rather than 54.08 or 63.01. The heading 58.06 CET. Act covers "other special woven fabrics" and that Tubular fabrics in a common parlance is not known as a fabrics since they are not flat in nature. These fabrics may be rather considered as special woven fabrics and merit classification under heading 58.06. 5. The said issue came up for discussion in the South Zone Tariff Conference held on 4th and 5th October, 1988 at Bangalore wherein it was held that the tubular fabrics do not have any special weave or construction to merit classification as special woven fabrics under heading 58.06. It has a warp and weft as in the case of other fabrics i.e. the only difference is that it emerges from the loom in a tubular form. In view of the above the South Zone Tariff Conference held that HDPE tubular fabric are not special woven fabrics, falling under heading 58.06 but are correctly classifiable under heading 54.08. 6. The matter was further examined in the Board. Most of the fabrics used for manufacture of hosiery items are in tubular form and such fabrics are manufactured in circular looms. They are not flat in nature still they are known as fabrics. As per Textile Terms and Definitions by the Manchester Textile Institute a loom is a machine for producing cloth by weaving and a circular loom is a loom on which shuttle travel simultaneously on a circular path So out of circular loom only cloth or fabric can be manufactured and not a sack. 7. The said product out of the circular loom has not attained the essential characteristics of a sack. In common parlance a sack will refer to a product which is closed on three sides. The packing is done through the opening side and after sack is filled it is stitched at the opening side. But the product coming out of the said circular loom is open on both the sides and as such it is not fit for any packing. In a technical sense the sacks are only containers made out of textile or other materials. The essential characteristics of container is the capability to contain anything but the so called giant size sack is not capable of containing anything. So it does not fulfill the essential characteristics as in the rules of interpretation 2(a). For the purpose of Chapter 63, the 'made up' expression is defined in Note 5 of Section XI. The tubular fabrics or cut piece thereof do not conform to the said definition of made up article and hence do not fall under heading 63.01. 8. On the above grounds, the Board is of the view that tubular HDPE woven fabrics or cut-pieces thereof, are correctly classifiable under heading 54.08 of Central Excise Tariff.