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TMI Blog2024 (1) TMI 974X X X X Extracts X X X X X X X X Extracts X X X X ..... property; the latter variety sometimes bear initials or figures or comprise sometimes a framed space to take a hand written inscription. Condition that these products must not be embroidery. Goods will not have embroidery on them. Due to this explanation in the HSN explanatory notes the proposed imports will get covered under exclusion clause of CTH 5806. In the instant case the goods will be imported without printing of labels on them. Applicant has argued that the textiles labels printed or otherwise are classifiable under HSN 5807 10. Various courts in a plethora of cases have held that HSN explanatory notes have a persuasive effect in deciding the matters of classification. Keeping in view the observation of Apex Court in various decisions referred in forgoing paras as well as the decision of High Court decision in case of BIJAY KUMAR PODDAR VERSUS UNION OF INDIA [ 1999 (9) TMI 106 - HIGH COURT AT CALCUTTA] , it is found that the said products have to be considered as articles similar to labels of textile materials in strips and accordingly are classifiable under heading CTH 58.07.1 do not find any grounds to disagree with the High Court decision in case of M/s Bijay Kumar Pod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in Table-A as under Table 'A' No. Item Description Width in MM 1 Nylon Taffeta Roll 45.00 2 Nylon Taffeta Roll 30.00 3 Nylon Taffeta Roll 127.00 4 Nylon Taffeta Roll 25.00 5 Nylon Taffeta Roll 25.00 6 Nylon Taffeta Roll 32.00 7 Nylon Taffeta Roll 64.00 8 Nylon Taffeta Roll 38.00 9 Nylon Taffeta Roll 40.00 10 Nylon Taffeta Roll 38.00 11 Nylon Taffeta Roll 32.00 12 Nylon Taffeta Roll 32.00 13 Nylon Taffeta Roll 25.00 14 Nylon Taffeta Roll 10.00 15 Nylon Taffeta Roll 204.00 16 Nylon Taffeta Roll 153.00 17 Nylon Taffeta Roll 102.00 18 Single Side Oven Edge Polyester-Satin Roll 28.00 19 Single Side Oven Edge Polyester-Satin Roll 25.00 20 Tearaway Taffeta Roll 35.00 21 Single Side Oven Edge Polyester-Satin Roll 32.00 22 Single Side Slit polyester Satin Roll 12.00 23 Single Side Oven Edge Polyester-Satin Roll 45.00 24 Single Side Oven Edge Polyester-Satin Roll 15.00 25 Iron On Taffeta Roll 30.00 26 Iron On Taffeta Roll 22.00 27 Iron On Taffeta Roll 20.00 28 Recycled Single Side slit Black polyester-satin Roll 40.00 29 Iron On Taffeta Roll 305.00 30 Tearaway Taffeta Roll 30.00 31 Singl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the customers. The polyamide coating on the product facilitates printing of the product/ washing information on the labels which is later stitched to the products. It is submitted that the coated/calendered side of the rolls shines compared to the side without coating/calendering. * Further, it is submitted that typically the rolls shall be of the width 10mm to 50mm but at times the supplier has a standard size of the rolls say 300mm or 500mm, which will subsequently be cut to the size for use as labels by the customers. 2.3 The applicant has asked specific question(s) on which Advance Ruling is required: a) Whether the products proposed to be imported can be classified under CTH 580710 of the First Schedule to the Customs Tariff Act, 1975 and leviable to customs duty of 10%? b) If answer to (a) above is negative, what is the classification of the products proposed to be imported? c) Whether the products are covered by entry no. 153 of Schedule II of Notification 1/2017 -IGST (Rate) 28 June 2017? d) If answer to (c) above is negative, what is IGST rate under sub-section (7) of Section 3 of the said Customs Tariff Act read with Notifications issued on import of the produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riptions or motifs on the articles classified here are generally produced by weaving (usually broche work) or by printing. (2) They must be in the piece, in strips (as is usually the case) or in separate units obtained by cutting to size or shape but must not be otherwise made up. This heading does not include lables, badges and similar products, which have been embroidered (heading 58.10) or made up otherwise than by cutting to shape or size (heading 61.17, 62.17, or 63.07). The products proposed to be imported by the applicant are meant to be used to capture trademark, wash care instructions and other details like country of manufacturing, size, make etc. on the products for the reference of the customers. The photos depicting the end use of the product is attached with application. The applicant relics on the Ruling of The Customs Authority for Advance Ruling - Mumbai in the case of M/s Mahaveer Impex CAAR/Mum/ARC/01/2023 dated 17 January 2023 and the decision of the Calcutta High Court in the case of M/s Bijay Kumar Poddar vs Union of India 2000 (126) ELT 393 (Calcutta). The relevant extract of Ruling in the case of M/s Mahaveer Impex CAAR/Mum/ARC/01/2023 dated 17 January ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be determined by application of the well-settled rules or principles of interpretation which have been referred to as "common parlance " rule, "trade or commercial parlance " rule, "common sense rule of interpretation" and "user test". The application of the principles will again depend on the facts and circumstances of each case. No test or tests can be said to be of universal application. Each case will have to be decided by applying one or more rules of interpretation depending upon the facts of that particular case. Further, the Supreme Court in the case of DUNLOP INDIA LTD. & MADRAS RUBBER FACTORY LTD reported in 1983 (13) E.L.T. 1566 (S.C.) in para 31 & 36 has observed as follows: 31. It is well established that in interpreting the meaning of words in a taxing statute, the acceptation of a particular word by the Trade and its popular meaning should commend itself to the authority. 36. We are, however, unable to accept the submission. It is clear that meanings given to articles in a fiscal statute must be as people in trade and commerce, conversant with the subject, generally treat and understand them in the usual course. But onc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d shall mean 'labels' and are classifiable under the chap.er heading 580710. 3.4 Functional Test:- The Hon. Supreme Court m the case of ATUL GLASS INDUSTRIES LTD. 1986 (25) E.L. T. 473 (S.C.) has held that classification of the product can also be based on functional test i.e. the function the product performs. In this case the dispute was classification of Screens fitted in motor vehicles as wind screens, rear screens and door screens. The court observed as follows while approving the classification as part of car. 8. The test commonly applied to such cases is : How is the product identified by the class or section of people dealing with or using the product? That is a test which is attracted whenever the statute does not contain any definition. Porritts and Spencer (Asia) Ltd. v. State of Haryana (19 78) 42 S. T. C. 433 = 1983 (13) E.L.T. 1607 (S. C). It is generally by US functional character that a product is so identified. In Commissioner of Sales Tax, UP. v. Macneill & Barry Ltd., Kanpur (1985) 2 SCALE 1093 = 1986 (23) E.L.T. 5 (S.C), this Court expressed the view that ammonia paper and ferro paper, used for obtaining prints and sketches of site plans could not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in State of Orissa v. Janta Medical Stores (1976) 37 STC 33 in the negative. To the same effect is the decision of this Court in Indo International Industries v. Commissioner of Sales Tax, Uttar Pradesh, (1981) 3 S.C.R. 294 = 1981 (6) E.L.T. 325 (S.C.), where hypodermic clinical syringes were regarded as falling more accurately under the entry relating to "hospital equipment and apparatus" rather than under the entry which related to "glass-wares" in the U.P. Sales Tax Act. Thus, the applicant submitted that the classification of any product is based on ultimate function which it performs. 3.5 No alternate use available of the products One side or both sides of Rolls proposed to be imported by the applicant shall be coated/ processed specially to enable printing. It is a common practice of the retailers to stitch labels to the products to provide wash care information or details about the supplier/ make etc. The printing of such information is not legible & durable on the plain fabric as in the normal fabric printing is not clear and printing gets smudged. Further, it is important that the information printed should stay for longer period and even after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strict sense then in that case the material imported can be said similar to label. The relevant extract is reproduced below: 20. Sub-heading 58.07 provides and covers labels and similar articles. If it is not label in strict sense. In that case the material imported can be said similar to label.... 23. Unprinted labels if not accepted giving narrow meaning to it. It should be accepted as similar articles as that of label. Specially when in the trade world it is known as label. 3.7 The Rolls would be imported in standard sizes and can be cut as per the requirement of the customer:- The Rolls comes in a specified size as maintained by the suppliers and commonly accepted in the trade practices. The applicant shall import the Rolls as per the standard size maintained by the supplier and subsequently sell the same to the Indian customers who will cut to size as per their requirements. Further, the Rolls have multiple Industry applications like garments, toys, automobile and the same are required to be cut in the size as per the product's requirement and hence, it does not come with marking. In case the Rolls are given a specific marking for cutting then the same will have a lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... states the conditions for classifying the goods under the heading 5807. The same is reproduced below for ready reference: "(1) They must not be embroidery. The inscriptions or motifs on the articles classified here are generally produced by weaving (usually broche work) or by printing. (2) They must be in the piece, in strips (as is usually the case) or in separate units obtained by cutting to size or shape but must not be otherwise made up." On plain reading of condition number 1, it is evident that the goods following under the heading 5807 shall have inscriptions or motifs on them produced by wearing or by printing and it shall not be produced by way of embroidery. The importer had made a reference to the point that, if the goods are not covered under labels the same may be considered as qualifying under similar articles of labels and thereby falls under the heading 5807. Without prejudice to going into the merits of whether the goods can be treated as similar articles of labels, it is important to consider whether similar articles of labels are covered under the heading 5807. The heading 5807 covers "Labels, badges and similar articles of textile materials, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tents, use, or destination. It is also a distinctive name or trademark identifying a product or manufacturer. It may be woven, knitted or crocheted. It may be printed or coloured woven; plain or embossed; big or small. Since there are no standard specifications with aspect to dimensions, it needs to be distinguished from made ups of a kind classified under Chapters 61-63. The design, content of text, etc., are the crucial determining factors. In terms of Interpretative Rule 1 and Rule 2(a), labels, whether they are made ups or not, should be classified under this heading, provided they should have an essential character of a label. However, Section Note 7(a) to Section XI is equally important. As per this Note, any fabric cut into a square and a rectangle will not be considered a made up. So, labels cut from a roll of ribbon without closed or hemmed edges do not qualify as made ups in terms of Section Note 7. Instead, they ought to be treated as ribbon in running length (under heading 5806). But, if such ribbons have regular cut markings and they bear typical designs of a label, they shall he treated as labels in strips of this heading. This should not mean that ribbons cut at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sible to the naked eye, then the goods are classifiable under 6003 3000. 5. If the rolls are of knitted fabric and the width is more than 30 cm, then the same shall be classifiable as follows: a. If the rolls are warp knitted, the same shall be classifiable under the heading 6005 8-digit level the classification depends on whether the goods are unbleached/bleached/dyed/printed. b. If the rolls are weft knitted, the same shall be classifiable under the heading 6006 8-digit level the classification depends on whether the goods are unbleached/bleached/dyed/printed. 5. A personal hearing in the matter was conducted on 21.12.2023 in office of the CAAR, Mumbai. During the personal hearing the authorized representatives of M/s. Mean Light Co., Shri S. S. Gupta, Advocate and Shri Vaibhav Shah, Advocate both reiterated their earlier submissions made in the applications to CAAR, Mumbai. They also cited some case laws to strengthen their argument that the products in question are correctly classifiable under CTH 5807 more particularly under 5807 10. It is pertinent to mention that no one appeared from the concerned Jurisdiction Commissionerate i.e. Chennai Customs House during the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case, the rolls are coated/processed specifically to enable legible and durable printing, which is not possible on normal fabric as it get smudged and disappeared quickly. Accordingly, the basis of the classification i.e. 'not coated or coating is not visible' is incorrect and hence, the rolls proposed to be imported by the applicant do not fall under HSN 58063200, 5407 or 5512. The classification under Chapter 59 shall be applicable to woven fabrics of Chapters 50 to 55 and headings 5803 and 5806 etc. The note 1 of the Chapter 59 is reproduced below: 1. Except where the context otherwise requires, for the purposes of this Chapter, the expression "textile fabrics" applies only to the woven fabrics of Chapters 50 to 55 and headings 5803 and 5806, the braids and ornamental trimmings in the piece of heading 5808 and the knitted or crocheted fabrics of headings 6002 to 6006. The applicant submitted that their product does not fall in the above chapters and accordingly, the classification HSN 5903 does not apply to it. The applicant has further submitted that the satin rolls are not coated with polyamide or any polymeric material. In the present case, the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h, Advocate present for M/s. Mahaveer Impex. In the instant case the same advocates Shri S. S. Gupta and Shri Vaibhav Shah are present for the applicant M/s. Mean Light Co. and moreover, they have submitted the very same arguments and sought classification of the said 'products' under Heading 5807 10 and has advocated that the said 'products' are covered by entry no. 153 of Schedule II of Notification 1/2017 - IGST (Rate) dated 28 June 2017. In the case of M/s. Mahaveer Impex, the Customs Authority for Advance Rulings has ruled that the said 'products' are specifically classifiable under sub-heading 5807 1020 and said 'Products' are covered under the entry no. 153 of Schedule II of Notification 1/2017 - IGST (Rate) 28 June 2017. I have gone through the observations of the Authority in the case of M/s. Mahaveer Impex and I am of the view that the Authority in the case ibid has deliberated upon every aspect to decide the case on merit. Further, the said advocates have rebutted the comments of the jurisdiction Chennai Customs House thoroughly. Case laws cited by the learned advocated have been perused by me and I have understood their relevance in the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th a selvedge, either real or false. These products remain classified here when watered ("moire"), embossed, printed, etc. Bolducs This heading also covers narrow fabrics (bolducs) of a width usually ranging from a few mm to 1 cm, consisting of warp (parallelised yams, monofilaments or textile fibres) without weft but assembled by means of an adhesive. This heading excludes:- (a) Bandages, medicated or put up in forms or packings for retail sale (heading 30.05). (b) Narrow woven fabrics with woven fringes, braided galloons and braids (heading 58.08). (c) Narrow woven fabrics more specifically covered by other headings, e.g., those having the character of: (1) Woven labels, badges and similar articles, in strips (heading 58.07 or 58.10) 6.3. Chapter heading 58.07 covers labels, badges and similar articles of textile materials, in the piece, in strips or cut to shape or size, not embroidered. 5807 10 - Woven 5807 10 10 -- Of cotton 5807 10 20 -- Of man-made fibre 5807 10 90 -- Other 5807 90 - Other As per HSN Explanatory notes to CTH 58.07, subject to the conditions specified below, this heading covers: (A) Labels of any textile material (including kn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... those having the character of (1) Woven labels, badges and similar articles, in strips (heading 58.07 or 58.10). The HSN Explanatory notes to CTH 58.07, subject to the conditions specified, cover the labels of any textile material. These include labels of a kind used for marking wearing apparel, household linen, mattresses, tents, soft toys, or other goods. They are utilitarian labels bearing individual inscriptions or motifs. Such labels include, inter alia, commercial labels bearing the trade name or trade mark of the manufacturer or the nature of the constituent textile ("silk', "viscose rayon", etc.) and labels used by private individuals (boarding school pupils, soldiers, etc.) to identify their personal property; the latter variety sometimes bear initials or figures or comprise sometimes a framed space to take a hand written inscription. Condition that these products must not be embroidery. Goods will not have embroidery on them. Duc to this explanation in the HSN explanatory notes the proposed imports will get covered under exclusion clause of CTH 5806. In the instant case the goods will be imported without printing of labels on them. Applicant has argue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c or fundamental character of the article lies in its being a mirror." It has been observed by their Lordship in Commissioner of Customs & C. Ex., Amritsar v. D.L. Steels - 2022 (381) E.L.T. 289 (S.C.) that "...well-settled principle that words in a taxing statute must be construed in consonance with their commonly accepted meaning in the trade and their popular meaning. When a word is not explicitly defined, or there is ambiguity as to its meaning, it must be interpreted for the purpose of classification in the popular sense, which is the sense attributed to it by those people who are conversant with the subject matter that the statute is dealing with. This principle should commend to the authorities as it is a good fiscal policy not to put people in doubt or quandary about their tax liability. The common parlance test is an extension of the general principle of interpretation of statutes for deciphering the mind of the law-maker." Applying the same ratio, the product commonly identified by the section of people dealing in or using the same would be known as Label due to its functional character. Further, due to the exclusion clause the said label or similar art ..... X X X X Extracts X X X X X X X X Extracts X X X X
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