TaxTMI 
TaxTMI 
2019 (8) TMI 1356
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....dvance ruling pronounced by the Appellate Authority under Chapter XVII of the Act shall be binding only (a). On the applicant who had sought it in respect of any matter referred to in sub-section (2) of Section 97 for advance ruling; (b). On the concerned officer or the jurisdictional officer in respect of the applicant. 3. under Section 103 (2) of the Act, this advance ruling shall be binding unless the law, facts or circumstances supporting the said advance ruling have changed. 4. Under Section 104(1) of the Act, where the Appellate Authority finds that advance ruling pronounced by it under sub-section (1) of Section 101 has been obtained by the appellant by fraud or suppression of material facts or misrepresentation of facts, it may, by order, declare such ruling to be void sb initio and thereupon all the provisions of this Act or the rules made thereunder shall apply to the appellant as if such advance ruling has never been made. At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. Therefore, unless a ment....
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....Sets are nothing but three different pieces of fabrics cut from the lengthy fabrics which has to be ultimately stitched into a complete Salwar / Churidar Set and hence can be classified as "Fabrics", based on the constituent materials. In some of the sets, certain degree of stitching or neck work is done. These items cannot be worn as such and requires further stitching according to the measurement of the user. They are essentially in the form of fabric and have not attained the characteristics of an article like that of a readymade shirt or pant. They relied on the circular issued by the Central Board of Excise and Customs No. 557/53/2000 dated 03.11.2000, wherein it is clarified that Dhotis and Sarees are classifiable as fabrics only and stated that the same rationale would hold good for Salwar and Churidar sets also. Also, as per circular issued by the CBIC, No. 13/13/2017 dated 27.10.2017, Cut pieces of Fabrics are classifiable under chapters 50 to 55 of First Schedule to the Customs Tariff Act 1975 on the basis of their constituent materials and attract a uniform GST rate of 5% with no refund of the unutilized input tax credit. The applicant has sought the correct classificati....
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....edule Il of Notification 1/2017 -Central Tax(Rate) dt. 28.06.2017 as amended and 6% SGST as per Sl.no 170 in Schedule 11 of Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017. 4. Aggrieved by the above decision as to the classification and rate of GST applicable for the products of Model 2, 3 and 4, the Appellant has filed the present appeal. The grounds of appeal are as follows: • The Salwar/ Churidar sets in question comprise of three pieces of fabric and in some of the sets, certain degree of stitching or neck-work is done. These items cannot be worn as such and requires further stitching according to the measurements of the user. They are essentially in the form of fabric only and not attained the characteristics of an article of apparel like that of a shirt or pant or readymade Churidars wherein both the top and bottom are fully stitched and ready to wear. • Reference is invited to the Circular issued by the Central Board of Excise and Customs bearing No. 557/53/2000 dated 03.11.2000, in the context of classification of dhotis and saree under the erstwhile Central Excise Tariff, wherein it has been clarified that they a....
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....ers 50 to 60. Further, General Rule 2 of the Interpretation of Customs tariff was relied upon to substantiate that any unfinished goods or incomplete articles has the essential character of the complete or finished article, should be classified under the appropriate heading of "finished article". • Based on the description in Chapter notes, the authorities have ruled that the fabrics cut into pieces otherwise than into squares or rectangles, are to be termed as "made up" therefore excluded from CTH 50 to 60 as "fabrics" and fall under CTH 6211; • The products specified in S.No. 2 to 4 above are Semi-finished such as neck work done, embellishment done, part of the article of the complete set was stitched, hence this products should be appropriately classifiable under the heads of articles of particular made ups. This observation of the lower authorities is not sustainable for a reason that though these articles are incomplete or unfinished, the same has not attained the essential character of "READY MADE GARMENTS OR CHURIDHAR SETS". Unless the semi finished products/ articles attains the essential character, the same cannot be called as a "COMPLETE LADIES G....
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....on of the Model 2[Top semi-stitched and bottom not stitched], Model 3 [Top stitched but bottom not stitched] and Model 4 (Top Neck-worked; Both Top and Bottom not stitched] Salwar/Churidar sets with duppatta hemmed/ knotted, traded by them, as to whether they are to be classified as "Fabrics" under Chapters 50 to 55 depending on the constituent material or as "articles of apparel and made up textile articles" under Chapter 61,62 and 63 and the applicable appropriate rate of GST. 8. From the submissions, it is seen that the appellant are engaged in the trading of readymade garments, fabrics and other similar items. The product under consideration is the Salwar/ Churidar sets with duppatta containing three different pieces in a set, of which some piece have to be ultimately stitched to size to make a finished Salwar/Churidar set. The different models being sold by the applicant are 1) Both Top and Bottom not stitched- a model where no stitching has been done and the Top is merely cut into size; 2) Top Semi-stitched and Bottom not stitched- a model where the Top is semi-stitched, requiring further cutting and stitching to size(sample produced): 3) Top sti....
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....consideration are incomplete or unfinished and the same has not attained the essential character to be called as a 'Complete Ladies garments' and classified under CTH 6211. In this connection, we find that, it is to be examined whether CTH 6211 covers only 'Complete Ladies garments' or the heading also covers 'incomplete or unfinished articles listed in the CTH 6211' as the products under consideration are in 'incomplete or unfinished' state. 9.1 For the purposes of GST, in terms of explanation (iii) and (iv) to Notification No. 1/2017 - Central Tax (Rate) dt. 28-06-2017, tariff heading, subheading, heading and chapter shall mean respectively a tariff item, sub-heading, heading and chapter as specified in the First Schedule to the Customs Tariff Act, 1975 and the rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975, including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall be applied for the interpretation and classification of goods. 9.1 CTH 6211 of the Customs Tariff is reproduced below for ease of reference: 6211 TRACK SUITS, SKI SUITS AND SWIMWEAR; OTHER GARMENTS ....
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....tional trade. It groups these goods in Sections. Chapters and sub-chapters which they have been given titles indicating as concisely as possible the categories or types of goods they cover. In many cases, however, the variety and number of goods classified in a section or chapter are such that it is impossible to cover them all or to cite them specifically in the titles. (II) Rule 1 begins therefore by establishing that the titles are provided "for ease of reference only". They accordingly have no legal hearing on classification. (III) The second part of this Rule provides that classification shall be determined:- (a) According to the terms of the headings and any relative Section or Chapter Notes. And (b) Where appropriate, provided the headings or Notes do not otherwise require, according to the provisions of Rules 2, 3, 4 and 5. (IV) Provision (III) (a) is self-evident, and many goods are classified in the Nomenclature without recourse to any further consideration of the Interpretative Rules (e.g. live horses (heading 01.01). Pharmaceutical goods specified in Note 4 to Chapter 30 (heading 30.06)) (V) In Provision (III)(b),- ....
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....nly the complete article but also that article incomplete or unfinished, provided that, as presented, it has the essential character of the complete or finished article. (II) The provisions of this Rule also apply to blanks unless these are specified in a particular heading. The term "blank" means an article, not ready for direct use, having the approximate shape or outline of the finished article or part, and which can only be used, other than in exceptional cases, for completion into the finished article or part (e.g., bottle preforms of plastics being intermediate products having tubular shape, with one closed end and one open end threaded to secure a screw type closure, the portion below the threaded end being intended to be expanded to a desired size and shape). Semi-manufactures not yet having the essential shape of the finished articles (such as is generally the case with bars, discs, tubes, etc.) are not regarded as "blanks". (III) In view of the scope of the headings of Sections 1 to VI. this part of the Rules does not normally apply to goods of these Sections. (IV) Several cases covered by the Rule are cited in the General Explanatory Notes to S....
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....s or Churidhar Sets" but has not elaborated the grounds. They have stated that further stitching to size is required and the set is known in common parlance as 'Unstitched Salwar materials'. We find that the products under consideration are sets consisting of three pieces of cloth 1. Top, 2. Bottom and 3. Duppatta. In Model 2, the Top is semi-stitched and duppatta knotted/ stitched and the bottom is unstitched; Model- 3, Top is completely stitched and duppatta knotted/ stitched and bottom is unstitched; Model-4, Top is Neck-worked and both top & bottom unstitched(not displayed during the Personal hearing). It is agreed that in the sets under consideration, the Salwar (bottom) requires stitching and the Kurta(Top) is to be stitched to size but mere Stitching / Stitching to size do not take away the characteristics of the garments being Salwar/ Churidar sets. It will not be out of context to mention that in the Model 2 and 3 displayed during the hearing, it was observed that the duppatta which is one of the pieces in the Set is hemmed/ knotted and in a ready to wear condition. The sets can be used only as 'Churidars' and cannot be used as any other garments or termed as 'fabrics'. Th....
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....e was of the view that in three pieces the items remain fabric. To be a garment' made up- it has to be more than mere fabric. Made up article in Chapter 63 covers pieces which have undergone some working, such as hemming or formation of necklines. intended for the manufacture of garments but not yet sufficiently completed to be identifiable as garments or parts of garments. Thus. mere fabric. even if embroidered or has stitching of lace and tikki etc.. and even if sold in three piece fabric as ladies suit set. will continue to classifiable as (as essential character of fabrics is not altered) and attract 5% GST. The committee has stated that even in three pieces the items remain fabric, if embroidered or has stitching of lace and tikki etc., and to be a garment/ made up, it must have undergone some working, intended for manufacture of garments. The above comments were placed before the 31^st GST council Meeting and was accepted by the council and thereupon, CBIC has issued a Circular No 80/54/2018-GST dt 31.12.2018, the effective portion of which is as follows: 10.3 Earlier, vide Circular no. 13/13/2017-CGST dated 27th October 2017, it has been clarified that mere p....