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TMI Blog2024 (7) TMI 409X X X X Extracts X X X X X X X X Extracts X X X X ..... would fall under Chapters 52 to 55 as per the exclusion clause as mentioned in Serial No. 125 Chapter Note 2(a) of Chapter 59. On going through the Chapter Note 2(a)(4) of the Chapter Heading 5903 and as per the test report of Atira the specimen fabric i.e. Polyester plus cotton interlining woven fabrics being partially covered with plastic and bearing design resulting from this treatment which leads to the plastic coated pattern which is visible on one side of the fabric will fall under Chapters 502, 55 58 or 60 as per Chapter Note 2(a)(4) of the relevant Chapter 59 of the GST Tariff and not under Chapter 59 Heading 5903 as held by the impugned orders. Impugned order dated order dated 08.04.2021 passed by the Gujarat Appellate Authority for Advance Ruling Goods and Service Tax is quashed and set aide and the product manufactured by the petitioner being partially covered with plastic coated pattern i.e. visible on one side of the fabric and the same will fall under Chapters 50 to 55 58 or 60 GST Tariff and not under Chapter 59 of Chapter Note 5903 as held by the impugned order. Petition allowed. - HONOURABLE MR. JUSTICE BHARGAV D. KARIA AND HONOURABLE MR. JUSTICE NIRAL R. MEHTA A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer to adjudicate the issue of classification on Its own merits. 4.8 Vide Judgement dated 19.06.2018, the Hon'ble Tribunal decided the Issue of classification in favour of M/s. Madura Coats classifying the partially coated fabric under chapter 52. 4.9 On 13.03.2019, the Petitioner opted for advance ruling of classification of interlining cloth as provided under the GST Act. 4.10 The Advance Ruling Authority vide its order dated 28.09.2020 have held that the goods are classifiable under Chapter 59. 4.11 Against the aforesaid order, the petitioner had filed Appeal with the Appellate Authority of Advance Ruling. 4.12 Vide order dated 08.04.2021, the Appellate relied upon different process applied on cloth to confirm classification under Chapter 59. Aggrieved by the same, the petitioner has approached this Court by way of present petition. 5. Learned Senior advocate Mr. Deven Parikh submitted that the appellant-authority has totally discarded the submissions on merits and has not followed binding precedence on the presumption that the fabric as fully coated quality. It was pointed out that after comparison of the test report, the outcome of the test report is recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us and not completely embedded in plastic and therefore, the assumption made by the appellate authority that the fabric being completely covered and completely coated on one side is fallacious and perverse and order based on such assumption, is required to be quashed and set aside. 5.3 It was submitted that the appellate-authority could have sought clarification from the Atira or could have sent the sample to any other Government laboratory for testing purpose, however, the impugned orders are passed only on the basis of the assumption and therefore, liable to be quashed and set aside. 5.4 Learned Senior advocate Mr. Parikh invited the attention of the Court to the clarification issued by the Atira at Annexure L of the petition wherein it is clarified that the fabric is partially coated. It was therefore submitted that fabric being partially coated requires to be classified under Chapter 52 as per Chapter 4 of Chapter 59 and the impugned order classifying the partially coated fabric as per Chapter No. 5903 is therefore bad in law and requires to be quashed and set aside. 5.5 It was further submitted that partially coated fabrics are to be covered under Chapters 52 to 55 depending u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CBEC, New Delhi mentioned above and that the ratio of the two decisions relied upon. by the GAAR are not applicable to the appellant's case, as in both the cases viz. Sadguru Baridhan Pvt. Ltd. and Ruby Mills ltd., they have not referred or analyzed the decision of Madura Coats Pvt. Ltd. vs. Commissioner of Central Excise , Tirunelveli on which the appellant has relied for the purpose of getting Ruling from GAAR. It is submitted that all the aforementioned orders have been issued by the Authorities of Advance Ruling/Appellate Authorities of Advance Ruling after the issuance of the order dated 19.06.2018 of the Appellate Tribunal of Chennai in the case of Madura Coats Pvt. Ltd. It is also submitted that the quashing of CBEC's Circular No. 433/66/98-CX.6 dated 27.11.1998 by the High Court of Madras is one of the major grounds on which the. Appellate Tribunal has decided the case in favour of Madura Coats Pvt. Ltd. by ruling that the impugned goods would not be classified under CETH 59.03. Further, the view and stand of CBEC in respect of Circular No. 433/66/9-CX.6 dated 27.11.1998 has been clearly discussed and clarified in detail in the orders of Authority of Advance Ruling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AAR/2019-20 dated 11.11.2019 issued by the West Bengal Advance Ruling Authority in respect of M/s Sadguru Seva Paridhan Pvt. Lid. Wherein a was held that fusible interlining fabric of cotton is classifiable under Heading 5903 in Chapter 59 of the first schedule to the Customs Tariff Act, 1975, (2) Order No. 11/2019-20 dated: 12.03.2020 issued by the Uttarakhand State Advance Ruling Authority in respect of M/s The Ruby Mills Ltd . wherein it was held that fusible interlining fabric of cotton is classifiable under Heading 5903 in Chapter 59 of the first Schedule to the Customs Tariff Act, 1975. (3) Order dated: 19.03.2020 of the Appellate Authority for Advance Ruling, West Bengal in the case of Appeal Case No. 15/WBAAAR/APPEAL/2019 filed by M /s Sadguru Seva Paridhan Pvt. Ltd wherein the order No. 33/WBAAR/2019-20 dated: 11.11.2019 issued by West Bengal Advance Ruling Authority was upheld. 10. With respect to contentions raised in Para 16 to 23, it is submitted that the Appellate Authority of Advance ruling has found that GAAR has neither misread the Chapter Note 2(a) nor negated the content of Chapter Note 2(a) by referring to explanatory notes to HSN in respect of Heading 5903, bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act or cellular), provided: (1) That, in the case of impregnated, coated or covered fabrics, the impregnation, coating or covering can be seen with the naked eye otherwise than by a resulting change in colour. Textile fabrics in which the impregnation, coating or covering cannot be seen with the naked eye or can be seen only by reason of a resulting change in colour usually fall in Chapters 50 to 55, 58 or 60. Examples of such ----- (2) That the products are not rigid, i.e. they can, without fracturing, be bent manually around a cylinder of a diameter of 7 mm, at a temperature between 15 degrees centigrade and 30 degrees centigrade. (3) That the textile fabric is not completely embedded in, nor coated or covered on both sides with, plastics. Products not meeting the requirements of subparagraph (2) or (3) above usually fall in Chapter 39. However, textile fabric coated or covered on both sides with plastics where the coating or covering cannot be seen with the naked eye, or can be seen only by reason of a resulting change in colour, usually falls in Chapter 50 to 55, 58 or 60. Except in the case of textile products of heading 58.11, textile fabrics combined with plates, sheets or s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since the Chapter Note 2(a) of Chapter 59 stipulates that fabrics/ products as detailed/ described under Column (2) below, corresponding to Sr. No. (1) to (5) of the said Note under Column (1) below, will not be covered under Heading 59.03/ will be excluded from Heading 59.03 the test results in Column (3) below contradicts the respective criteria mentioned in column (2), therefore, the sample product/ fabric of the appellant i.e. M/s Girish Rathod (Jay Ambey) invariably fall under Heading 5903 of the Customs Tariff Act, 1975 (51 of 1975). The comparison of the same is as under: Sr.No. Type of Fabrics that are excluded from Heading 5903 as per criteria (1) to (6) of Chapter Note 2(a) of Chapter 59 of the Customs Tariff Act, 1975 (51 of 1975) Corresponding test results as per ATIRA s test report. Whether condition for being classified under Heading 5903 is fulfilled: (1) (2) (3) (4) 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; The product is polymer coated on one side. Coating cannot be seen with the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... teria 2: As per this criteria, products which cannot, without fracturing, be bent manually around a cylinder of a diameter of 7 mm, at a temperature between 15 o C and 30 o C would fall under Chapter 39. As per the test result, the product can be bent without fracturing around a cylinder of a diameter 7m or more at temperature between 15 degrees C to 30 degrees C, hence the product/fabric fulfills this criteria/condition also for being classified under Heading 5903. Criteria 3: As per this criteria, 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 would fall under Chapter 39. As per the test result, the fabric is not completely embedded in plastic but is covered with plastic polymer on one side, hence the product/fabric fulfills this criteria/condition also for being classified under Heading 5903. Criteria 4: As per this criteria, fabrics partially coated or partially covered with plastics and bearing designs resulting from these treatments are covered under C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covered or partially coated with plastics by any stretch of imagination. In view of the above, we conclude that the product/fabric fulfills this criteria/condition also for being classified under Heading 5903. Criteria 5: As per this criteria, plates, sheets or strip of cellular plastics, combined with textile fabric, where the textile fabric is present merely for reinforcing purposes would fall under Chapter 39. As per the test results, the fabric is not merely present for reinforcing purposes of plates, sheets or strip of cellular plastics since it contains 85% and more of cotton, hence the product/fabric fulfills this criteria/condition also for being classified under Heading 5903. 13. Chapter notes of Chapter 52 read as under: Sub-Heading Note: For the purposes of sub-headings 5209 42 and 5211 42, the expression denim means fabrics of yarns of different colours, of 3 - thread or 4~= thread twill, including broken twill, warp faced, the warp yarns of which are of one and the same colour and the weft yarns of which are unbleached, bleached, dyed, grey or coloured a lighter shade of the colour of the warp yarns. 14. Since chapter notes of Heading 5208 and 5209 are not available, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n may be dismissed and no interference may be made in the impugned orders passed by the appellate authority on advance ruling. 7. Having heard learned advocate for the respective parties and having considered the facts of the case, findings arrived at by the appellate authority of the advance ruling confirming the order passed by the advance ruling authority holding that the product fusible inter lining fabric of cotton of the petitioner is correctly classifiable under Heading 5903 of Chapter 59 to the First Schedule to the Custom Tariff Act, 1975, is based upon difference between Chapter under 2(a) for Heading 5903 Chapter 59 in First Schedule of Custom Tariff Act, 1975 and the explanatory note of Heading No. 5903 from HSN without considering the contents of the Heading 5903 of the Custom Tariff Act which reads as under: 5903 TEXTILE FABRICS, IMPREGNATED, COATED, COVERED OR LAMINATED WITH PLASTICS OTHER THAN THOSE OF HEADING 5902 5903 10 With Polyvinyl Chlorine 5903 10 10 Imitation leather fabrics 5903 10 90 other 5903 20 With polyurethane 5903 20 10 Imitation leather fabrics of cotton 5903 20 10 other 5903 20 10 Other 5903 20 10 Of cotton 5903 20 10 Polyethylene laminated jute fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find that film coating also involves coating with natural or synthetic polymeric substance (plastic). Even otherwise, the criteria only stipulates that coating must not be visible with the naked eye but does not mention polymer coating or film coating, hence the product/fabric fulfills this criteria/condition also for being classified under Heading 5903. Criteria 2 : As per this criteria, products which cannot, without fracturing, be bent manually around a cylinder of a diameter of 7 mm, at a temperature between 15 o C and 30 o C would fall under Chapter 39. As per the test result, the product can be bent without fracturing around a cylinder of a diameter 7m or more at temperature between 15 degrees C to 30 degrees C, hence the product/fabric fulfills this criteria/condition also for being classified under Heading 5903. Criteria 3: As per this criteria, 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 would fall under Chapter 39. As per the test result, the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted. Such type of coating cannot be termed as partially coated OR partially covered with plastic polymer i.e. it would rather be considered as half-coated or half-covered with plastic polymers. Thus, since one of the two sides of the fabric is completely covered with plastic polymer as per the aforementioned test result, it cannot be considered to be partially covered or partially coated with plastics by any stretch of imagination. In view of the above, we conclude that the product/fabric fulfills this criteria/condition also for being classified under Heading 5903. Criteria 5: As per this criteria, plates, sheets or strip of cellular plastics, combined with textile fabric, where the textile fabric is present merely for reinforcing purposes would fall under Chapter 39. As per the test results, the fabric is not merely present for reinforcing purposes of plates, sheets or strip of cellular plastics since it contains 85% and more of cotton, hence the product/fabric fulfills this criteria/condition also for being classified under Heading 5903. 9. From the above it is clear that as per the test report of the Atira, the fabric manufactured by the petitioner was partially coated and once ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chapter Note 2(a)(4) of the Chapter 59 of the GST Tariff. Therefore, on going through the Chapter Note 2(a)(4) of the Chapter Heading 5903 and as per the test report of Atira the specimen fabric i.e. Polyester plus cotton interlining woven fabrics being partially covered with plastic and bearing design resulting from this treatment which leads to the plastic coated pattern which is visible on one side of the fabric will fall under Chapters 502, 55 58 or 60 as per Chapter Note 2(a)(4) of the relevant Chapter 59 of the GST Tariff and not under Chapter 59 Heading 5903 as held by the impugned orders. 13. In view of the foregoing reasons the petition succeeds and is accordingly allowed. Impugned order dated order dated 08.04.2021 passed by the Gujarat Appellate Authority for Advance Ruling Goods and Service Tax is quashed and set aide and the product manufactured by the petitioner being partially covered with plastic coated pattern i.e. visible on one side of the fabric and the same will fall under Chapters 50 to 55 58 or 60 GST Tariff and not under Chapter 59 of Chapter Note 5903 as held by the impugned order. Rule is made absolute to the aforesaid extent. No order as to costs. - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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