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 character test endorsed by the SC, the authority held the goods are commonly identified and used as labels, and by virtue of the relevant exclusion clause they are not classifiable under heading 58.06. They were therefore held classifiable as labels or similar articles of textile materials in strips under heading 58.07, at the 8-digit level under CTI 58071010 (cotton), 58071020 (man-made fibre), or 58071090 (other) depending on composition. As so classified, the goods were held covered by entry 153 of Schedule II of Notif. 1/2017-IGST (Rate), attracting the corresponding IGST rate.
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.
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