Classification of velcro fasteners as narrow woven fabrics secured sales tax exemption under the relevant Tamil Nadu entry.

Hook and loop tape fasteners (velcro fasteners) were treated as narrow woven fabrics classifiable under heading 58.06, not as articles falling under heading 58.07. On that classification, they qualified for exemption under section 8 of the Tamil Nadu General Sales Tax Act, 1959 read with the relevant Third Schedule entry. The attempt to shift the commodity to an inapplicable or residuary heading was rejected because the tariff description and the material on record supported treatment as narrow woven fabric, and a strained classification cannot defeat a specific exemption entry. The clarification and consequential assessment and appellate orders were set aside, and the matters were remitted for fresh disposal accordingly.

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Issues: Whether hook and loop tape fasteners, also called velcro fasteners, are classifiable under heading 58.06 as narrow woven fabrics so as to attract exemption under section 8 of the Tamil Nadu General Sales Tax Act, 1959, or whether they fall under heading 58.07 and are taxable.

Analysis: The relevant exemption under section 8 of the Tamil Nadu General Sales Tax Act, 1959 applies to goods specified in the Third Schedule, including narrow woven fabrics described against heading 58.06 of the First Schedule to the Additional Duties of Excise (Goods of Special Importance) Act, 1957. The material placed before the authority showed that the commodity is a narrow woven fabric and not an article of textile materials of the kind described under heading 58.07. A product cannot be taken out of a specific exemption entry by a strained or artificial classification, and the authority's attempt to place the commodity in the residuary or inapplicable heading was found unsupported by the relevant tariff description and contrary to the earlier departmental understanding.

Conclusion: The commodity was held to fall under heading 58.06 and to be exempt from sales tax under section 8 of the Tamil Nadu General Sales Tax Act, 1959. The clarification and the consequential assessment and appellate orders were set aside, and the related matters were remitted for fresh disposal in the light of this determination.

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