2019 (3) TMI 923 - AAR - GST

Classification of Salwar/Churidar sets under specific GST rates based on stitching complexity

The ruling determined that different models of Salwar/Churidar sets are classified under specific Tariff headings and attract varying GST rates. Model 1, ... Classification of goods - Salwar/Churidhar sets, comprising of three sets of Tops, Bottom and Dupatta - whether partially stitched/ neck work done, or not - whether the impugned goods would remain as fabrics under Chapters 50,52,54,55 based on the constituent material and attract a total 5% GST; or they are classifiable under Chapters 61 to 63, thereby attracting a total of 5% if their sale price is less than ₹ 1,000 and 12 % GST if their sale price is more than ₹ 1,000? Held that:- It is seen from Note 7 (a) to Section XI of Customs Tariff that ‘made up’ means cut otherwise than into squares or rectangles. The Top in Model 2 of the Applicant is fabric already cut into the shape of a salwar top but is not completely stitched. This means that this is not a fabric in square or rectangle shape and hence is a ‘made up’. The Top in Model 4 is also not a fabric in square or rectangle but has the neck portion cut and worked on. This too would qualify as a ‘made up’. It is seen from Note 7 (O to Section XI of Customs Tariff that ‘made up’ means assembled by sewing, gumming or otherwise. The top in Model 3 is fully stitched or assembled by sewing and hence would be a ‘made up’. Thus, Model 2,3 and 4 is a set containing ‘made up’ articles of textiles for Top of salwar suit and pieces of fabrics for Bottom and Dupatta of salwar suit. Model 2, 3 and 4 have some additional cutting and stitching on the Top made up article which is either a complete Top of salwar, in case of Model 3, or is an unfinished Top of a salwar suit, in case of Model 2 and 4. They are also sold as ‘Chudi material’ by the Applicant which contains made up article of Top and fabrics of Bottom and Dupatta. Together all three constitute an unstitched salwar suit containing made up articles of textile. As per Rule 2 to the general Interpretative Rules above, the incomplete articles has the essential characteristic of a made up article of a salwar suit and are not mere pieces of fabric. Therefore, Model 2, 3 and 4 would be classifiable as a salwar suit. Dependng on the textile material, Model 2, 3 and 4 would be classified under various subheadings under Tariff heading of 6211 i.e 621142 / 621143/621149. Model 1 salwar/chudidar sets supplied by the Applicant is classifiable as Fabrics under Chapter 50 to 55 depending on the material. The applicable rate of tax would be 2.5% CGST as per applicable Sl.no (depending on the material) in Schedule I of Notification 1/2017-Central Tax(Rate) dt. 28.06.2017 as amended and 2.5% SGST as per applicable Sl.no (depending on the material) in Schedule I of Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017. Model 2,3 and 4 salwar/chudidar sets supplied by the Applicant are classifiable as made up articles under Tariff heading 621142/621143/621149 depending on the material. The Applicable rate of tax for such articles of sale value not exceeding ₹ 1000 per piece, would be 2.5% CGST as per Sl.no 223 in Schedule I of Notification 1/2017-Central Tax(Rate) dt. 28.06.2017 as amended and 2.5% SGST as per Sl.no 223 in Schedule 1 of Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017. The Applicable rate of tax for such articles of sale value exceeding ₹ 1000 per piece, would be 6% CGST as per Sl.no 170 in Schedule 11 of Notification 1/2017-Central Tax(Rate) dt. 28.06.2017 as amended and 6% SGST as per Sl.no 170 in Schedule II of Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017. Issues Involved:1. Classification of Salwar/Churidar sets under GST.2. Applicable GST rates for different models of Salwar/Churidar sets.Detailed Analysis:Issue 1: Classification of Salwar/Churidar sets under GSTThe applicant, engaged in trading readymade garments, sought an advance ruling on the classification and applicable GST rates for Salwar/Churidar sets. The sets in question include:1. Both Top and Bottom not stitched.2. Top semi-stitched and Bottom not stitched.3. Top stitched but Bottom not stitched.4. Top Neck-worked; Both Top and Bottom not stitched.The applicant argued that these sets should be classified as 'fabrics' under Chapters 50 to 55 based on the constituent material, attracting a 5% GST rate. They referenced CBIC Circulars No. 557/53/2000 and No. 13/13/2017, which state that cut pieces of fabrics remain classified as fabrics and attract a uniform GST rate of 5%.Issue 2: Applicable GST rates for different models of Salwar/Churidar setsModel 1: Both Top and Bottom not stitchedThe ruling determined that Model 1, consisting of three pieces of fabric (Top, Bottom, and Dupatta) where no stitching has been done, is classified as fabric under Chapters 50 to 55, depending on the material. The applicable GST rate is 5% (2.5% CGST + 2.5% SGST).Model 2: Top semi-stitched and Bottom not stitchedFor Model 2, where the Top is partially cut into shape but requires further cutting and stitching, it is classified as a 'made up' article under Tariff heading 621142/621143/621149, depending on the material. The applicable GST rate is 5% (2.5% CGST + 2.5% SGST) if the sale value is up to Rs. 1000 and 12% (6% CGST + 6% SGST) if the sale value exceeds Rs. 1000.Model 3: Top stitched but Bottom not stitchedModel 3, where the Top is fully stitched, is also classified as a 'made up' article under Tariff heading 621142/621143/621149, depending on the material. The applicable GST rate is 5% (2.5% CGST + 2.5% SGST) if the sale value is up to Rs. 1000 and 12% (6% CGST + 6% SGST) if the sale value exceeds Rs. 1000.Model 4: Top Neck-worked; Both Top and Bottom not stitchedModel 4, where the Top has the neck portion cut and design worked into it, is classified as a 'made up' article under Tariff heading 621142/621143/621149, depending on the material. The applicable GST rate is 5% (2.5% CGST + 2.5% SGST) if the sale value is up to Rs. 1000 and 12% (6% CGST + 6% SGST) if the sale value exceeds Rs. 1000.Ruling:1. Model 1: Classified as fabric under Chapters 50 to 55. Applicable GST rate: 5% (2.5% CGST + 2.5% SGST).2. Model 2: Classified as made up articles under Tariff heading 621142/621143/621149. Applicable GST rate: 5% (2.5% CGST + 2.5% SGST) if sale value = Rs. 1000; 12% (6% CGST + 6% SGST) if sale value > Rs. 1000.3. Model 3: Classified as made up articles under Tariff heading 621142/621143/621149. Applicable GST rate: 5% (2.5% CGST + 2.5% SGST) if sale value = Rs. 1000; 12% (6% CGST + 6% SGST) if sale value > Rs. 1000.4. Model 4: Classified as made up articles under Tariff heading 621142/621143/621149. Applicable GST rate: 5% (2.5% CGST + 2.5% SGST) if sale value = Rs. 1000; 12% (6% CGST + 6% SGST) if sale value > Rs. 1000.