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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 ..... ning cloth, which is used in cuffs, collars, etc. Prior to 1988, the goods were classified under various Chapters. To clarify the issue pertaining to classification, the department had issued Circular No. 24/Coated Fabric/88-CX. 1 dated 2.9.1988. By way of aforesaid circular, it is clarified that fabrics partially coated with plastics and bearing designs are excluded from purview of Heading 5903. 4.2 On 15.06.1989, by way of insertion of Chapter Note 2 (c) in Chapter 59 by Finance Act, 1989, the partially coated fabrics were also classified under Chapter 59. The department had Issued Circular bearing No. 5/89 dated 15.6.1989 clarifying the Chapter Note by which partially coated fabrics were first time classified under Chapter 59. 4.3 The aforesaid Chapter Note was omitted with effect from 16.3.1995. In view of the above omission, the status of classification prior to 1989 was restored as per general trade understanding. 4.4 The department insisted for classification under Chapter 59 and a Circular bearing No. 433/66/98 dated 27.11.1998 was issued classifying the partially coated fabrics under Chapter 5903. 4.5 In the case of M/s. Madura Coats, the Hon'ble Madras High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was submitted that CESTAT in case of Madura Coats Pvt Ltd vs. C.B.E.& C. New Delhi, reported in 2004 (163) ELT 164 (Mad.) has held that partially coated fabrics is classifiable under Chapters 52, 54 and 55 and could not be covered under Chapter 59 as held by the respondent-authority. It was submitted that lower authorities are bound by the orders of the Tribunal and could not have taken a different view. It was therefore submitted that the impugned orders are liable to be quashed and the matter may be remanded back to the respondent authorities for re-adjudication to decide the same. 5.2 It was submitted by learned Senior Advocate Mr. Parikh that finding of the appellate-authority that criteria 2 regarding classification under Chapter 5903 is fulfilled is also not correct as the said chapter note applies to a the fabric fully coated with film on one or both the sides whereas, the product of the petitioner is partially coated as per the test report obtained from the Atria and the product manufactured by the petitioner is also not of kind mentioned in Chapter Note 3 and 5. It was therefore submitted that the respondent authorities have failed to consider chapter note correctly. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set aside by the High Court, the Advance Ruling Authority could not have held that the circular still has a persuasive value. 5.7 Reliance was also placed upon advance ruling order in case of M/s. Goodswear Fashion Pvt. Ltd reported in 2019 (23) G.S.T.L. 154 (A.A.R-GST) as the facts of the sad case were comparable with the case of the petitioner. It was therefore submitted that the order passed by the Advance Ruling in case of M/s. Goodswear Fashion Pvt. Ltd (supra) ought to have been followed and could not have been distinguished on the ground that the test results are different and hence, order cannot be relied upon without recording any reason showing difference in test results. 6. On the other hand, learned advocate Mr. P.Y. Divyeshwar for the respondent-authority referred to and relied upon the following averments made in the affidavit-in-reply filed on behalf of respondent Nos. 1, 2 and 4: "6. With respect to contentions raised in Para 15, 24 and 25, it is submitted that the contention of the appellant that the Appellate Authority of advance ruling has not examined the decision of Madura Coats Pvt. Ltd. vs. CBEC, New Delhi, is not correct. The Appellate Authority of advan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assification of fusible interlining cloth under Heading 5903 was quashed by the High Court of Madras (iii) 'Fusible Interlining Fabrics of Cotton' were not classifiable under Chapter 5903 but was correctly classifiable under Chapter 52 of the erstwhile Tariff stating that the very basis for changing the classification i.e. Note 2 (c) which was introduced in Chapter 59 has therefore been deleted w.e.f. 16.03.1995 and therefore the position as existed prior to the introduction of said note would be restored. (iv) the retest reports of fabrics of appellant clearly indicate that the samples of the impugned fabric have characteristics which would fall within the exclusion (i) to (v) of Chapter Note 2(a) to CETH 59.03 and also the requirement of impervious for the purpose of Board's telex Circular 30.09.88 and Circular No. 5/89 is not be satisfied. 8. The appellant has relied upon the decision of the order of the Authority of Advance Ruling of Uttarakhand in the case of M/s Goodswear Fashion Pvt. Ltd. the ruling in the above case has been based on the testing of samples of specimen of fabric of the said applicant from NITRA, Uttar Pradesh. The same is not applicable to the instant case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... note of Heading No. 5903 from HSN for guidance 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 15oC and 30oC (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, sheets or strip of cellular plastics, combined with textile fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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. Chapter Note 2(a) of Chapter 59 reads as under: 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 7mm, at a temperature between 15oC and 30oC (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) fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fabrics partially coated or partially covered with plastics and bearing designs resulting from these treatments (usually Chapters 50 to 55, 58 or 60); It is covered with plastic polymer on one side and bears a design like a dot matrix design resulting from coating process. Yes 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 The product contains 85% and more cotton. Yes 12. Since all the five criteria / condition required for the Product of the appellant for being classified under Heading 5903 have been fulfilled, the Appellate Authority of Advance Ruling found that based on the test results of the sample product/ fabric obtained by the appellant from ATIRA, Ahmedabad, the said product "fusible Interlining Fabric of Cotton" is undoubtedly classifiable under Heading 5903 of Customs Tariff Act, 1975 (51 of 1975) for the reasons discussed hereunder: Criteria 1: As per this criteria, fabrics in which the impregnation, coating or covering cannot be seen with the naked eye would usually fall under Chapters 50 to 55, 58 or 60. As per the test results, polymer coati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red or completely coated on one side with plastic polymer and the other side is uncoated. Thus, even when one side of the fabric is completely coated with plastic polymers, it cannot be said to be partially coated or partially covered with plastic polymers. To clarify the issue, we will be required to refer to the meaning of 'partially' as appearing in the dictionaries. The meaning of 'partially' as per various dictionaries is mentioned below: (i) As per Vocabulary.com, meaning of 'partially' is - in part, partly, in some degree. (ii) As per Thesaurus.com, meaning of 'partially' is - partly, somewhat, fractionally, in some measure, On going through the aforementioned meanings of 'partially' appearing in various dictionaries, it can be derived that it stands for 'a small part' of the whole OR 'a small fraction' of the whole OR 'a small measure' of the whole. In the present case, the fabric of the appellant i.e. 'fusible interlining fabric of cotton' is the 'whole' and only when a small fraction of the fabric OR a small part of the fabric OR a small measure of the fabric is coated with plastic polymer, can it be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vailable it reference is being made to explanatory notes to HSN with respect to Headings 5212 which read as under: This heading/ covers woven fabrics (as defined in Para {C) of the General Explanatory Note to Section(X]) made of cotton yarns. However, it should be noted that it covers only mixed woven fabrics, other than those of the preceding headings of this Chapter or specified or included in the second part of this Section (Chapter 58 or 59, usually). Bandages, medicated or put up for retail sale, are excluded (heading 30.05). 17. On going through the aforementioned headings, chapter note of Chapter 52 as well as the explanatory notes to HSN with respect of the headings 5208, 5209 and 5212, we find that it does not cover laminated fabrics or fabrics coated with plastics, Hence, it can be concluded that 'Fusible Interlining fabrics of cotton.' will not be covered under Chapter 52 of the First Schedule to the Customs Tariff Act, 1975. 18. The Ld. Appellate authority of Advance Ruling did not agree with the contention of the appellant when they state that their product/fabric falls under Sr.No.2 along (5) of Chapter Note 2(a) of Chapter 59, that it is therefore classifia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, without fracturing, be bent manually around a cylinder of a diameter of 7mm, at a temperature between 150C and 30oC (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, sheets or strip of cellular plastics, combined with textile fabric, where the textile fabric is present merely for reinforcing purposes (Chapter 39); or textile products of heading 5811." 8. On perusal of the above, it is clear that the Heading 5903 would apply only to the fabrics in which impregnation coating or covering cannot be seen with the naked eye. The comparison made by the appellate authority of the criteria prescribed under the Chapter Note 2(a) of Chapter 59 of the Custom Tariff Act, 1965 and the corresponding test result as per the Atira's test report is concerned, Criteria ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not covered under Chapter 50 to 55, 58 or 60, but under heading 5903. As per the corresponding test result of ATIRA, the fabric of the appellant is covered with plastic polymer on one side and bears a design like a dot matrix design resulting from coating process i.e. it does not mention that the fabric is partially coated or partially covered with plastics and bears designs resulting from these treatments. The test result also mentions that the said fabric is coated only on one side. On plain reading of the same, we can assume that the said fabric is completely covered or completely coated on one side with plastic polymer and the other side is uncoated. Thus, even when one side of the fabric is completely coated with plastic polymers, it cannot be said to be partially coated or partially covered with plastic polymers. To clarify the issue, we will be required to refer to the meaning of 'partially' as appearing in the dictionaries. The meaning of 'partially' as per various dictionaries is mentioned below: (i) As per Vocabulary.com, meaning of 'partially' is - in part, partly, in some degree. (ii) As per Thesaurus.com, meaning of 'partially' is - partly, somewhat, fractionally, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rlining fabric received at ATIRA for testing. Further we have tested for following permeability standard test. The test results are as follows Fabric Air Permeability coated Fabric ISO 9237 20'x20' 102.18 Fabirc Water Permeability coated Fabric ASTM D 4491 Fabirc 18.65 From above both fabrics shows Air and Water permeability after coasting indicates that coating is done but it is partial in nature. The fabric can be considered as partially coated or partially covered plastics and bearing designs resulting from these treatments (Dot matrix printing process)." 11. It is also apparent from the impugned orders passed by the authority that once the Hon'ble Madras High Court has set aside the Circular No. 4233 dated 27.11.1998 such decision is binding upon the respondent-authority instead of distinguishing the same on the ground that fusible interlining fabric of cotton are classifiable under Heading 5903 and not under Heading 52 to 55 contrary to the test reports placed on record. 12. In view of the above facts impugned orders passed by the advance ruling authority and confirmed by the appellate authority are not tenable and are required to be quashed and set aside and the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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