2025 (1) TMI 1717 - AAR - Customs

Imported woven textile rolls used as labels: tariff reclassified from 58.06 to 58.07, IGST applied under Notif. 1/2017 entry 153

Woven textile rolls proposed for import were assessed for tariff classification and consequent IGST rate. Applying the common parlance/functional ... Classification of products proposed to be imported - woven rolls - to be classified under CTH 5807 1090 of the First Schedule to the Customs Tariff Act, 1975 and leviable to customs duty of 10% or not - applicability of entry no. 153 of Schedule II of N/N. 1/2017- IGST (Rate) 28 June 2017 - applicable rate of IGST - HELD THAT:- From the descriptions of the products, it is found that the same are of various type having sizes ranging from 10 mm to 305 mm. However, there is only one item in the list of products having width exceeding 300 mm, namely 'Nylon Taffeta Roll - 305 mm'. The applicant has claimed that the impugned goods are made of woven materials and are not embroidered and that there is no alternative use of the products except as labels. It is observed that this is obligatory on their part so as to approve the intended classification of the subject goods under CTH 5807. In the case of Atul Glass Industries Ltd. and Others v. Collector of Central Excise and Others [1986 (7) TMI 90 - SUPREME COURT] wherein Hon'ble Supreme Court has observed 'It is clear, however, that after the amendment of Tariff Item No. 34A by the Finance Act, 1979 the scope of that Tariff Item is restricted to the 15 commodities specified therein. That being so the screens manufactured by the petitioner merit classification in the residuary Tariff Item No. 68.' - Applying the same ratio, the product commonly identified by the section of people dealing in or using the same would be known as Label due to its functional character. Further, due to the exclusion clause the said label or similar articles in strip would not be covered under heading 58.06. The Rolls made of Nylon Taffeta roll, Polyester Taffeta roll. Tearaway Taffeta roll, Iron on fusing Taffeta roll, Single side slit polyester satin roll, double side slit polyester satin roll, Single side woven edge polyester satin roll, Double side woven edge satin roll, Single side slit polyester cotton roll, Recyclable Single side slit polyester satin roll etc. which are available with width ranges from 10 millimetre to 305 millimetre, collectively referred to as 'Products' proposed to be imported by the applicant merit classification as articles similar to label of textile material in strips under CTH 5807 according to their constituting materials and design of the Customs Tariff. Accordingly, the subject goods as reflected in Table 'A' are classifiable at 8-digit level under CTI 5807 1010 (Of cotton), 5807 1020 (Of man-made fibre) & 58071090 (Other) according to their composition and characteristics. The above said 'products' are covered by entry no. 153 of Schedule II of Notification 1/2017 - IGST (Rate) 28 June 2017. Issues: (i) Whether the rolls described in Table 'A' are classifiable as labels or similar articles of textile materials under CTH 5807 (including sub-headings 5807 1010, 5807 1020 and 5807 1090) and thereby attract basic customs duty as per the First Schedule; (ii) Whether the said products are covered by entry no. 153 of Schedule II of Notification No. 1/2017-IGST (Rate) dated 28 June 2017.Issue (i): Whether the products proposed to be imported merit classification under CTH 5807 10xx / 5807 1090.Analysis: The products are narrow woven rolls (widths 10 mm to 305 mm), not embroidered, coated/processed to enable printing and used as labels to carry trademark/wash-care/other product information. HSN explanatory notes for headings 58.06 and 58.07 distinguish narrow woven fabrics and labels; where articles have the character of woven labels or similar articles they fall under heading 58.07 and are excluded from 58.06. Precedents and tests relied upon include the common parlance/trade parlance test and the functional test to identify an article by its primary function. Samples and submissions indicate the rolls are understood in trade as labels and lack an alternate use; earlier advance rulings on similar goods reached the same classification.Conclusion: The products are classifiable as articles similar to labels of textile material in strips under heading 5807 and, at the 8-digit level, under 5807 1010, 5807 1020 and 5807 1090 according to composition and characteristics.Issue (ii): Whether the products are covered by entry no. 153 of Schedule II of Notification No. 1/2017-IGST (Rate) dated 28 June 2017.Analysis: Given the classification under heading 5807 as concluded above, the applicability of rates in Notification No. 1/2017-IGST (Rate) is determined by the entry corresponding to that heading. Entry no. 153 of Schedule II relevantly applies to goods classifiable under CTH 5807 as considered in the submissions and prior decisions.Conclusion: The products are covered by entry no. 153 of Schedule II of Notification No. 1/2017-IGST (Rate) dated 28 June 2017 and attract the IGST rate specified therein.Final Conclusion: The Authority grants the advance ruling that the rolls described in Table 'A' are classifiable under heading 5807 (with appropriate 8-digit sub-headings by material) and are covered by entry no. 153 of Schedule II of Notification No. 1/2017-IGST (Rate) dated 28 June 2017.Ratio Decidendi: Rolls of woven textile material, not embroidered, which are in strips or cut-to-size and are functionally used as labels (including unprinted strips with no alternate use) fall under tariff heading 58.07 and, if their composition so requires, under the specified 8-digit subheadings; such classification brings them within the corresponding entries of Notification No. 1/2017-IGST (Rate) including entry no. 153.