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TMI Blog2019 (8) TMI 1356X X X X Extracts X X X X X X X X Extracts X X X X ..... are in approximate shape/outline of the finished goods, more so with one piece in ready to wear condition, have the essential character of finished goods and in view of interpretative Rule 2(a) are classified as Kurta and Salwar with or without dupatta under CTH 6211. The second contention of the appellant is that once the trade raised the doubt, that, in trade parlance, these goods are supplied as fabric , which is subject to stitching according to the size/ shape and designs of the end user and therefore it cannot be termed as ready-made garments and only called as Churidar materials - HELD THAT:- The clarifications were issued that unstitched salwar suits are classifiable as fabrics and attract 5% GST. It is seen that CBIC vide Circular No. 13/2017 dated 27.10.2017 has clarified that Mere cutting and packing of fabrics into pieces of different lengths from bundles or thans, will not change the nature of these goods and such pieces of fabrics would continue to be classifiable under the respective heading as the fabric and attract the 5% GST. Thus, to be a garment/ made up, the product has to be more than mere fabric - In the case at hand it is already establ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing only (a). On the applicant who had sought it in respect of any matter referred to in sub-section (2) of Section 97 for advance ruling; (b). On the concerned officer or the jurisdictional officer in respect of the applicant. 3. under Section 103 (2) of the Act, this advance ruling shall be binding unless the law, facts or circumstances supporting the said advance ruling have changed. 4. Under Section 104(1) of the Act, where the Appellate Authority finds that advance ruling pronounced by it under sub-section (1) of Section 101 has been obtained by the appellant by fraud or suppression of material facts or misrepresentation of facts, it may, by order, declare such ruling to be void sb initio and thereupon all the provisions of this Act or the rules made thereunder shall apply to the appellant as if such advance ruling has never been made. At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferent pieces of fabrics cut from the lengthy fabrics which has to be ultimately stitched into a complete Salwar / Churidar Set and hence can be classified as Fabrics , based on the constituent materials. In some of the sets, certain degree of stitching or neck work is done. These items cannot be worn as such and requires further stitching according to the measurement of the user. They are essentially in the form of fabric and have not attained the characteristics of an article like that of a readymade shirt or pant. They relied on the circular issued by the Central Board of Excise and Customs No. 557/53/2000 dated 03.11.2000, wherein it is clarified that Dhotis and Sarees are classifiable as fabrics only and stated that the same rationale would hold good for Salwar and Churidar sets also. Also, as per circular issued by the CBIC, No. 13/13/2017 dated 27.10.2017, Cut pieces of Fabrics are classifiable under chapters 50 to 55 of First Schedule to the Customs Tariff Act 1975 on the basis of their constituent materials and attract a uniform GST rate of 5% with no refund of the unutilized input tax credit. The applicant has sought the correct classification of these items and applicab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per Sl.no 170 in Schedule Il of Notification 1/2017 -Central Tax(Rate) dt. 28.06.2017 as amended and 6% SGST as per Sl.no 170 in Schedule 11 of Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017. 4. Aggrieved by the above decision as to the classification and rate of GST applicable for the products of Model 2, 3 and 4, the Appellant has filed the present appeal. The grounds of appeal are as follows: The Salwar/ Churidar sets in question comprise of three pieces of fabric and in some of the sets, certain degree of stitching or neck-work is done. These items cannot be worn as such and requires further stitching according to the measurements of the user. They are essentially in the form of fabric only and not attained the characteristics of an article of apparel like that of a shirt or pant or readymade Churidars wherein both the top and bottom are fully stitched and ready to wear. Reference is invited to the Circular issued by the Central Board of Excise and Customs bearing No. 557/53/2000 dated 03.11.2000, in the context of classification of dhotis and saree under the erstwhile Central Excise Tariff, wherein it has been c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied under Chapters 50 to 60. Further, General Rule 2 of the Interpretation of Customs tariff was relied upon to substantiate that any unfinished goods or incomplete articles has the essential character of the complete or finished article, should be classified under the appropriate heading of finished article . Based on the description in Chapter notes, the authorities have ruled that the fabrics cut into pieces otherwise than into squares or rectangles, are to be termed as made up therefore excluded from CTH 50 to 60 as fabrics and fall under CTH 6211; The products specified in S.No. 2 to 4 above are Semi-finished such as neck work done, embellishment done, part of the article of the complete set was stitched, hence this products should be appropriately classifiable under the heads of articles of particular made ups. This observation of the lower authorities is not sustainable for a reason that though these articles are incomplete or unfinished, the same has not attained the essential character of READY MADE GARMENTS OR CHURIDHAR SETS . Unless the semi finished products/ articles attains the essential character, the same cannot be called as a COMPLETE L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue before us for determination is the classification of the Model 2[Top semi-stitched and bottom not stitched], Model 3 [Top stitched but bottom not stitched] and Model 4 (Top Neck-worked; Both Top and Bottom not stitched] Salwar/Churidar sets with duppatta hemmed/ knotted, traded by them, as to whether they are to be classified as Fabrics under Chapters 50 to 55 depending on the constituent material or as articles of apparel and made up textile articles under Chapter 61,62 and 63 and the applicable appropriate rate of GST. 8. From the submissions, it is seen that the appellant are engaged in the trading of readymade garments, fabrics and other similar items. The product under consideration is the Salwar/ Churidar sets with duppatta containing three different pieces in a set, of which some piece have to be ultimately stitched to size to make a finished Salwar/Churidar set. The different models being sold by the applicant are 1) Both Top and Bottom not stitched- a model where no stitching has been done and the Top is merely cut into size; 2) Top Semi-stitched and Bottom not stitched- a model where the Top is semi-stitched, requiring further cutting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ken one by one for consideration. The first contention is that the products under consideration are incomplete or unfinished and the same has not attained the essential character to be called as a Complete Ladies garments and classified under CTH 6211. In this connection, we find that, it is to be examined whether CTH 6211 covers only Complete Ladies garments or the heading also covers incomplete or unfinished articles listed in the CTH 6211 as the products under consideration are in incomplete or unfinished state. 9.1 For the purposes of GST, in terms of explanation (iii) and (iv) to Notification No. 1/2017 - Central Tax (Rate) dt. 28-06-2017, tariff heading, subheading, heading and chapter shall mean respectively a tariff item, sub-heading, heading and chapter as specified in the First Schedule to the Customs Tariff Act, 1975 and the rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975, including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall be applied for the interpretation and classification of goods. 9.1 CTH 6211 of the Customs Tariff is reproduced below for ease of reference: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 62114300 -- Of man-made fibres u 25% or Rs . 135 per piece , whichever is higher - 621149 -- Of Other textile materials : 62114910 --- Of wool or fine animal hair u 25% - 62114990 --- Other u 25% - From the above, it is seen that ---Kurta and salwar with or without duppatta is specified under the heading -Other garments, women s or girls and depending on the constituent material the product is classifiable under CTH 6211 4. . . . further to be examined, whether, the said CTH covers only Complete Ladies Garments or it includes incomplete or unfinished suits also. The Customs Tariff is based on Harmonious System ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly those headings cannot be extended to include goods which otherwise might fall there by reason of the operation of Rule 2(b) (b) The reference to Rule 2 in the expression according to the provisions of Rule 2, 3, 4 and 5 means that:- (1) Goods presented incomplete or unfinished (e.g.) a bicycle without saddle and tyres), and (2) Goods presented unassembled or disassembled (e.g. a bicycle unassembled or disassembled, all components being presented together) whose components could individually be classified in their own right (e.g. tyres, inner tubes) or as parts of these goods. are to be classified as if they were those goods in a complete or finished state, provided the terms of Rule (2) are satisfied and the headings or Notes do not otherwise require. As per the above Rule, classification is to be determined based on the terms of the heading and any related Section/ Chapter Note. CTH 6211 specifies Kurta and salwar with or without duppatta . To ascertain whether the incomplete or unfinished goods will also be classified under the said CT H, as per the explanation (V) above, it is to be seen if the goods ful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le also. It is further stated that several cases covered in this Rule are cited in the General Explanatory Notes to Sections and Chapters. The General Explanatory Notes to Chapter 62 states as follows: GENERAL This Chapter covers men's, women's or children's articles of apparel, clothing accessories and parts of apparel or of clothing accessories, made up of the fabrics (excluding wadding but including felt or non-wovens) of Chaplets 50 to 56, 58 and 59. With the exception of the articles or heading 62.12, articles of apparel, clothing accessories and parts made of knitted or crocheted material are excluded from this Chapter. .. By application of Note 14 to Section XI, garments of different headings are to be classified in their own headings even if put up in sets for retail sale. This, however, does not apply to garments put up in sets which are specifically mentioned in the heading texts, for example, suits, pyjamas, swimwear. It should be noted that, for the application of Note 14 to Section XI, the expression textile garments means garments of heading 62.01 to 62.11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th or without dupatta under CTH 6211. 10. The second contention of the appellant is that once the trade raised the doubt, that, in trade parlance, these goods are supplied as fabric , which is subject to stitching according to the size/ shape and designs of the end user and therefore it cannot be termed as ready-made garments and only called as Churidar materials , the matter was taken up for discussion by the GST council and accordingly clarifications were issued that unstitched salwar suits are classifiable as fabrics and attract 5% GST. 10.1 It is seen that CBIC vide Circular No. 13/2017 dated 27.10.2017 has clarified that Mere cutting and packing of fabrics into pieces of different lengths from bundles or thans, will not change the nature of these goods and such pieces of fabrics would continue to be classifiable under the respective heading as the fabric and attract the 5% GST. Further to this clarification, on the doubts raised by the Trade as to the applicable rate of tax and on the classification, when the embroidered fabric with certain embellishment are sold in three pieces(suit salwar and duppatta fabric), the issue was discussed by the Fitment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent lengths will not change the nature of these goods and such pieces of fabrics would continue to be classifiable under the respective heading as the fabric and attract the 5% GST rate. This clarification would equally apply to three pieces of fabrics sold in a pack as ladies salwar suit. Any embroidery on a fabric piece or certain embellishment thereon does not change the basic nature of their being a fabric. The chapter 63 covers garment, including the unstitched garments which may or may not be sufficiently completed to be identifiable as garments or parts of garments. However, heading 6307 would not cover a fabric pieces or a set of pre-packed fabric pieces, even if embroidered or embellished Such set of fabric pieces would attract GST at the rate of 5%. 10.2 From the above, it is evident that to be a garment/ made up, the product has to be more than mere fabric. It is further commented that Made up article in Chapter 63 covers pieces which have undergone some working, such as hemming or formation of necklines and intended for the manufacture of garments but not yet sufficiently completed to be identifiable as garments or parts of garments. In the case at hand it is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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