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TMI Blog2022 (1) TMI 745X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, the products supplied by the applicant have similar properties and purpose and therefore we proceed to find the appropriate classification. Whether the fabrics in hand satisfies the exclusions prescribed in chapter Note 2(a) of Chapter 59 and therefore is not classifiable under CTH 5903 or otherwise? - HELD THAT:- As per the Explanatory notes to CTH 5903, Textile fabrics which are spattered by spraying with visible particles of thermoplastic material and are capable of providing a bond to other fabrics or materials on the application of heat and pressure are covered under CTH 5903. The applicant during the personal hearing held on 11.02.2020 has stated that their product provides a stiffness; when the garment manufacturers use this, they pass through rollers which fuses to any other cloth placed beneath, i.e., these are capable of providing a bond to other fabric on the application of heat and pressure, which as per the explanatory notes is squarely covered under CTH 5903. Therefore, there are no hesitation to hold that the products in hand merits classification under CTH 5903 only. Thus, the Fusible Interlining Fabrics of Cotton (FIFC) fall under CTH 5903 for the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver two pre-heated rollers having a surface temperature of above 225 C, one of which is an engraved printing roller having fine dots engraved on it in which high density polyethylene (HDPE) powder is filled (through a hopper), and this powder gets printed onto the fabric. The excess powder is scraped away by a doctor blade provided in the hopper as in the case of roller printing. The dot printed cloth then passes through a heated chamber whereby the printed powder gets fixed. The said partial / discrete coating of fabric is carried out only on one side of the fabric. This coating pattern can be seen with the naked eye. They have stated that FIFC enhance the appearance of finished garment by influencing the following characteristics-handle and bulk, shape retention, shrinkage control, crease recovery, appearance after washing or dry cleaning and durability. FIFC is mainly used in the collars, cuffs, etc part of the garments. 2.2 The Applicant has also stated that the classification of FIFC has been the subject matter of several clarifications, litigations, and legislative (tariff) amendments under the erstwhile central excise regime. In this background, various dealers are presen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le fabric is either completely embedded in plastics or entirely coated or covered on both sides with such material, provided that such coating or covering can be seen with the naked eye with no account being taken of any resulting change of colour (Chapter 39); (4) fabrics partially coated or partially covered with plastics and bearing designs resulting from these treatments (usually chapters 50 to 55, chapter 58 or 60) (5) Plates, sheets or strip of cellular plastics, combined with textile fabric, where the textile fabric is present merely for reinforcing purposes (Chapter 39) or (6) Textile products of heading 5811 (b) fabrics made of yarn, strip or the like, impregnated, coated, covered or sheathed with plastics of heading 5604 2 Note 2(c) introduced in the chapter notes w.e.f 01.03.1989 2 (c) Textile fabrics, partially or discretely coated with plastic by dot printing process (Heading No. 59.03) 3 Note 2(c) modified in the chapter notes w.e.f 20.03.1990 2 (c) Textile fabrics, partially or discretely coated with plastic (Headin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mined on the basis of Chapter Note 2(a) read with CBEC circular of 1988. various amendments, clarifications and litigations that have taken place in respect of tariff entries and Chapter Notes for Chapter 52 and IISN 5903. The applicant has stated that the fusible interlining fabrics supplied by them includes the product manufactured by Madura Coats Private limited and therefore as per the decision of the Hon'ble CESTAT in case of Madura Coats Private Limited vs CCE, Tirunelveli [2019 (365) ELT 345 (Tri Chennai)] the said goods would not be classified under HSN Code 5903. 2.4 Further, the applicant has submitted that Circular No. 24/Coated Fabrics/88-CX. 1 dated 02.09.1988 had clarified that to merit classification under HSN Code 5903, textile fabrics must meet the following requirements:- (a) The fabric should have a continuous and adherent film or layer of plastic on one side of the fabric surface; (b) The fabric should be impervious; and (c) The fabric should satisfy the conditions prescribed in Note 2 of Chapter 59. In respect of the above, they have stated that that the dot printing done by the manufacturers of FIFC is not continuous. Further, such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 020. Shri. Udayan Choksi, Authorised Representative, appeared before the authority and submitted sample test report, Central Excise Tariff charges and case laws to justify that they are classifiable under CTH 52 or 5209. They stated that they do trading of the product and manufacturing process involves powder dot coating process. They stated that this means the fabric is particularly coated with a pattern, this pattern is uniform throughout one side of the fabric and it provides a stiffness. They stated that when garment manufacturers use this cloth, they pass through rolling which fuses to any other cloth beneath. They stated that they will submit test reports from relevant manufacturers on composition, manufacturing process, technical literature, sale and purchase invoice within 2 weeks' time. The state jurisdictional officer gave a written submission stating that classification should be 52-55,58/60 and also submitted a copy of Uttarakhand Advance Ruling Authority. 3.2 The applicant vide their letter dated 09.12.2019 has submitted the following documents: Sample particulars issued by The South India Textile Research Association dated 07.02.2020 to the applicant in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to. 3.4 The applicant was again given an opportunity to be personally heard on 05.03.2021. However, the applicant sought adjournment and the applicant was heard on 12.03.2021. The authorised representative appeared for the hearing. He furnished the written submissions along with exhibits 1 to 5 which was taken on record. He also furnished copies of the two Gujarat AAR rulings, West Bengal AAR AAAR, Uttarakhand AAR wherein the applicants are manufacturers but not traders like the applicant. The authorised representative has emphasized the Chapter Notes of 59, to be tested separately. If their products/fabrics passed any of the test then their products fall in that categories. In their case, they have not satisfied the Chapter Notes 1,2,3 5 and satisfies Chapter notes 4. Therefore, they are claiming for Chapter 50 to 55, 58 or 60. The Authorised representative emphasized that for the certificate which is being obtained (Exhibit I) there is no difference between the goods supplied by different manufacturers namely Madura, Ruby Swadesh and for those identical goods different manufacturers are charging different rates of GST as seen from their invoices. The members stated that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Textile fabrics, impregnated, coated, covered or laminated with plastics, other than those of heading 5902 other: of cotton 12% The officers also unpacked a bundle received by the dealer on 22.10.2021 which is purchased directly from Ruby Mills. The details of the samples are as below: Sl.No Particulars HSN HSN Description GST Rate 1 Ruby 590390 Textile fabrics impregnated coated covered or laminated with plastics other than those of heading 5902 other: of cotton 12% 4.1 The applicant was also given another opportunity to be personally heard on 26.11.2021. The Authorised representative appeared for the hearing and reiterated the submissions. He stated that the issue involved is the classification of FIFC, whether they are classifiable under CTH52 or 59. They stated that the product does not satisfy the condition at CTH59, Chapter note 2(4). The samples drawn by the department, presented before the members were examined. They stated that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AAR. West Bernal 5903 3 In Re; The Ruby Mills Ltd AAR. Uttarakhand 5903 4 In Re. Sadguru Seva Paridhan Appellate AAR, West Bengal 5903 5 In Re: Ashima Dyecot Pvt Ltd. AAR, Gujarat 5903 6 ln Re: Supercoat India AAR. Gujarat 5903 7 in Re: Jay Ambey AAR. Gujarat 5903 5.1 The State Jurisdictional officer vide their letter dated 27.12.2019 submitted the following comments on the issue raised by the applicant in their application. a. Prior to the introduction of Chapter Note 2(c) in Chapter 59. the CBEC had issued a Circular No.24/Coated Fabrics/88-CX. 1, dated 02.09.1988, which concluded that textile fabrics including the fusible inter-lining cloth to merit classification as coated fabrics under Heading 59.03 of Centra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 019 (365) ELT 345 It has been held that includability under HSN Code 5903 came to an end on 16.03.1995 with the deletion of Chapter Note 2(c) to Chapter 59 and that with effect from this date, whether any fabric could be classified under HSN Code 5903 would be determined on the basis of chapter note 2(a) which describes fabrics which are partially coated or partially covered with plastics and bearing designs resulting from these treatments are excluded from classification under HSN Code 5903. As a sequitur, it must be classified under Chapter 52 depending upon the weightage of cotton in the fabrics and not under the FISN Code 5903. It was submitted by the applicant that the Fusible Interlining Fabrics supplied by them includes the product manufactured by Madura Coats Private Limited, and therefore the decision of the Honourable CESTAT in Madura Coats Private Limited vs. CCE, Tirunelveli, the said goods would not be classified under the HSN code 5903 e) Authority for Advance Ruling GST. Uttarakhand, F.No.09/State Tax-UK/GST/Sec-97/2018-19/D.dun/0195. dated 30.01.2019 The specimen fabric i.e. Polyester Viscose fusing Interlining Woven Fabric, partially covered with plastic whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of this provision, no account should be taken of any resulting change of colour 2) products which cannot, without fracturing, be sent manually around a cylinder of a diameter of 7mm, at a temperature between 15 C and 30 C (usually Chapter 39) 3) ......................... 6) textile products of heading 5811 The applicant in Para No.9 of the application had stated that the coating pattern on FIFC could be seen with a naked eye. The fabrics FIFC fulfils the description of the Note 2(a)(1) to Chapter 59, thus the classification would fall under Heading 59.03 only. Hence, it is felt that there are no merits in the case for classifying FIFC under Chapter 52 and the request of the applicant may please be rejected. 6. We have carefully examined the facts contentions filed along with the application, submissions made during the hearing and thereafter, the samples presented before us and the submissions of the Jurisdictional authorities. The question on which the ruling is sought is,- Whether Fusible Interlining Fabrics of Cotton (FIFC) fall for classification under HSN Code 5903 or under Chapter 52(heading depending upon the weightage of cotton in the fabrics ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h are as follows: Sl.No Particulars HSN HSN Description GST Rate 1 Talco 590390 Textile fabrics impregnated coated covered or laminated with plastics other than those of heading 5902 other: of cotton 12% 2 Mcl 520929 Woven fabrics of cotton containing 85% or more by weight of cotton. Weighing more than 200 g/m2 bleached: other fabrics 5% 3 Ruby 590390 Textile fabrics, impregnated, coated, covered or laminated with plastics, other than those of heading 5902 other: of cotton 12% 7.2 The contention of the applicant is that,- In the Pre-GST regime, under Central Excise Tariff, with the inclusion and subsequent removal of Chapter Note 2(c) of Chapter 59, CESTAT Chennai in the case of Madura Coats Private Limited, has held that 'fusible interlining cloth' will not get classified under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es to HSN are examined hereunder: Chapter Note 2 to Chapter 59 of Customs Tariff : 2. Heading 5903 applies to: (a) textile fabrics, impregnated, coated, covered or laminated with plastics, whatever the weight per square metre and whatever the nature of the plastic material (compact or cellular), other than:- (1) fabrics in which the impregnation, coating or covering cannot be seen with the naked eye (usually Chapters 50 to 55, 58 or 60); for the purpose of this provision, no account should be taken of any resulting change of colour; (2) products which cannot, without fracturing, be bent manually around a cylinder of a diameter of 7 mm, at a temperature between 15 C and 30 C (usually Chapter 39); (3) products in which the textile fabric is either completely embedded in plastics or entirely coated or covered on both sides with such material, provided that such coating or covering can be seen with the naked eye with no account being taken of any resulting change of colour (Chapter 39); (4) fabrics partially coated or partially covered with plastics and bearing designs resulting from these treatments (usually Chapters 50 to 55, 58 or 60); (5) plates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are those impregnated with substances designed solely to render them crease-proof, moth-proof, unshrinkable or waterproof (i.e., waterproof gabardines and poplins). Textile fabrics partially coated or partially covered with plastics and bearing designs resulting from these treatments are also classified in Chapters 50 to 55, 58 or 60. This heading also covers dipped fabrics (other than those of heading 59.02), impregnated to improve their adhesion to rubber, and textile fabrics which are spattered by spraying with visible particles of thermoplastic material and are capable of providing a bond to other fabrics or materials on the application of heat and pressure. From the above, it is evident that CTH 5903 covers textile fabrics impregnated, coated, covered or laminated with plastics irrespective of the weight per square metre and the nature of plastic material. conditions at (1) and (4) of the Chapter Note 2 (a) are relevant to the case at hand Those textile fabrics in which the impregnation, coating or covering cannot be seen with the naked eye will usually fall in Chapters 50 to 55, 58 or 60 and for these purposes, no account is to be taken of any resu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons. Therefore, the exclusion at 2(a)(1) is also not satisfied. Thus, the exclusions provided under Chapter Note 2(a) pertaining to the classification of the products as classifiable under Chapter 52 to 55, 58 or 60 are not fulfilled. 8.5 Further more, as per the Explanatory notes to CTH 5903, Textile fabrics which are spattered by spraying with visible particles of thermoplastic material and are capable of providing a bond to other fabrics or materials on the application of heat and pressure are covered under CTH 5903. The applicant during the personal hearing held on 11.02.2020 has stated that their product provides a stiffness; when the garment manufacturers use this, they pass through rollers which fuses to any other cloth placed beneath, i.e., these are capable of providing a bond to other fabric on the application of heat and pressure, which as per the explanatory notes is squarely covered under CTH 5903. Therefore, we do not have any hesitation to hold that the products in hand merits classification under CTH 5903 only. 9.1 Having decided that the products merit classification only under CTH 5903 based on the findings at Para 8 above, we analyse the submissions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation remains valid in respect of classification under the Customs Tariff being adopted for the purposes of GST. 9.3 In the CESTAT decision in respect of M/s. Madura Coats, the CESTAT, based on the requirement in the Boards's telex Circular dated 30.09.88 and Circular No. 05/89 dated 15.06.89 has held that the impugned fabric will fall outside the scope of classifiability under CETA 5903. The moot point to be noted is that the Central Excise Tariff was aligned with the Customs Tariff only in the 1995 Budget after which Note 2(c) which existed in the Chapter Note of Chapter 59 was omitted, the implications of which stands clarified in the CBEC Circular No.433/66/98-CX dated 27.11.1998. This Circular has been established in Para 9.2 above, as remaining valid. Further, it is pertinent to note that the Tariff Description and Chapter notes guided by the Explanatory Notes to HSN will have primacy for the purpose of classification over Circulars issued by CBEC. Explanatory Notes to HSN under CTH 5903 (mentioned above) covers 'textile fabrics which are spattered by spraying with visible particles of thermoplastic material and are capable of providing a bond to other fabrics or m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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