Appellate ruling: Salwar/Churidar sets classified as garments under CTH 6211, attracting GST.

The appellate authority upheld the classification of Salwar/Churidar sets as garments under CTH 6211, particularly Models 2, 3, and 4, due to their essential character as finished goods. The sets were deemed to attract GST based on their sale price, with rates ranging from 2.5% to 6% CGST and SGST. Despite the appellant's argument for classification as fabrics based on further stitching requirements, the authority determined that the significant work done on the sets rendered them garments according to Rule 2(a) of the General Rules for Interpretation. The appeal was dismissed, affirming the original ruling on classification and GST rates.

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Issues Involved:

1. Classification of Salwar/Churidar sets under GST.
2. Applicable GST rate for different models of Salwar/Churidar sets.
3. Whether semi-stitched or partially stitched Salwar/Churidar sets are considered "fabrics" or "garments."

Issue-wise Detailed Analysis:

1. Classification of Salwar/Churidar Sets under GST:

The appellant, engaged in trading readymade garments and fabrics, sought an advance ruling on the classification of Salwar/Churidar sets comprising three pieces: Top, Bottom, and Dupatta. They argued these should be classified as "fabrics" under Chapters 50-55 based on the constituent material, attracting 5% GST. The original authority ruled that:

- Model 1 (Both Top and Bottom not stitched) is classifiable as fabric under Chapter 50-55.
- Models 2 (Top semi-stitched and Bottom not stitched), 3 (Top stitched but Bottom not stitched), and 4 (Top Neck-worked; Both Top and Bottom not stitched) are classifiable as made-up articles under Tariff heading 621142/621143/621149 depending on the material.

The appellate authority upheld this classification, stating that the sets, especially Models 2, 3, and 4, have the essential character of "finished goods" and thus fall under CTH 6211.

2. Applicable GST Rate for Different Models of Salwar/Churidar Sets:

The original authority determined the GST rates as follows:

- Model 1: 2.5% CGST and 2.5% SGST.
- Models 2, 3, and 4: 2.5% CGST and 2.5% SGST if the sale price is less than Rs. 1000 per piece; 6% CGST and 6% SGST if the sale price exceeds Rs. 1000 per piece.

The appellate authority confirmed these rates, emphasizing that the products, being classified under CTH 6211, attract GST based on their sale price.

3. Whether Semi-stitched or Partially Stitched Salwar/Churidar Sets are Considered "Fabrics" or "Garments":

The appellant argued that the sets, requiring further stitching, should be classified as "fabrics." They cited CBIC Circulars stating that mere cutting and packing of fabrics do not change their classification as fabrics. However, the appellate authority found that the products in question, especially Models 2, 3, and 4, have undergone significant work (e.g., hemming, stitching) and thus possess the essential character of garments. The authority referred to Rule 2(a) of the General Rules for Interpretation, which states that incomplete or unfinished articles having the essential character of the complete or finished article should be classified as such.

The appellate authority concluded that the sets, being more than mere fabrics and having undergone significant work, are appropriately classified as "garments" under CTH 6211. The authority dismissed the appeal, upholding the original ruling on classification and applicable GST rates.

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