TaxTMI 
TaxTMI 
2020 (7) TMI 109
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....ge, Coimbatore - 641659, (hereinafter referred to the 'Applicant'), is engaged in manufacture and supply of fabrics of different types The applicant is registered under the GST Act with GSTIN. 33AAECG4315R1ZE. They have sought Advance Ruling on the following question: What is the correct classification and rate of GST applicable on supply of the following Goods? Knitted Fabrics; Woven Fabrics; Woven Fabric bonded with Non-woven Fabric; Covers for pillow, latex block, mattresses; Foot Runner; Pillow Sheet; Chenille Yarn; Poly Propylene Extrusion Yam; Poly Propylene Texturized Yarn; Polyester Texturized Yarn. The Applicant has submitted the copy of application in Form GST ARA - 01 and also copy of Challan evidencing payment of application fees of Rs. 5,000/- each under sub-rule (1) of Rule 104 of CGST Rules 2017 and SGST Rules 2017. 2.1 The applicant has stated that they are a private limited company and engaged in manufacturing and supply of the following Goods: Knitted Fabrics; Woven Fabrics; Woven Fabric bonded with Non-woven Fabric; Covers for pillow, latex block, mattresses; Foot Runner; Pillow Sheet; Chenille Yarn; Poly Propylene Extrusion Yarn; Poly Propylene Texturize....
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....nspection to ensure the quality also strength testing and dispatched to the customer. d. Covers for Pillow, Latex Block and Mattress.: Different types of knitted and woven fabrics are involved in the process of making the above items. The fabrics are manufactured in-house. Once the fabric finishing is done, the fabric is taken to cutting table for cutting into bits and panels according to the specifications given for making covers for Pillow, latex and Mattress. After cutting process is over, the panels and bits are checked for quality and measurement and the same is sent for sewing. Apart from this part, the other materials and accessories involved are zippers, pullers, labels, brand tags and packing materials like polybags and carton boxes. In sewing, the above said fabric and zippers and other cut parts are joined in stitching and finished cover is the final product. The finished cover once again sent for checking against quality defects, stains or any other damages. Once it is passed for quality, it will be packed and dispatched to the customer. e. Foot Runner and Pillow Sheet : Fabric involved in producing Foot runner and pillow sheet are * Woven Fabric [Omega 901 and 29....
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....e frequent changes. For 4Nm - 4Nm yarn is coloured yarn because raw material itself dyed yarn and this yarn will not be sent to dye house. The yarn is captively used in their weaving section for fabric production. g. Poly Propylene Extrusion Yarn : The raw material Poly Propylene white chips and colored Poly Propylene granules are procured from outside. The PP white chips will be fed into extrusion machine along colored granules through colortronics system in the required ratio. The chips and granules are churned, grinded and melted in screw and barrel. The semi solid liquid (melt) will flow through the pipes in pressure, which are heated by chemical vapour. The melt will be metered through pump to get the desired denier and it will be squeezed out in filament from packs. Then it will be cooled by cool air as well as by natural cooling. After cooling, spinfinish oil is applied to cohesing the multi-filaments into single yarn form. Air is applied to distribute spinfinish (1.1kg/Cm2). Thereafter, stretching through the number of godets and intermingled points are applied through air (5 kg/Cm2). Finally wound on a paper cone in winder machine to get the final bobbin weighing around ....
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....ile material i.e., woven fabric and non-woven fabric, the goods sold in market is woven fabric as it is the base material. Hence the correct classification is 5407, as it is the most specific entry and it will attract 5% as per Sl.No. 217 of Schedule 1 of Notification No. 1/2017-C.T.(Rate) dated 28.06.2017 as amended Covers for (a) Pillow, (b) Latex Block and, (c) Mattress: These goods are nothing but made ups. As per Note 7 of Section XI Textile and Textile article of the Customs Tariff Act 1975, "made up means goods cut otherwise than into square or rectangles, produces in finished state, ready for use. Hence the goods are classifiable under CH6304 and will attract 5% GST as per SI.No.224 of Schedule I of Notification No.1 /2017 CT(R) incase if Selling price is less than Rs. 1000/- and will attract 12% GST if selling price is more than Rs. 1000/- as per S1.No.171 of Schedule 11 of Notification No.1/2017 CT(R) Foot Runner & Pillow Sheet: These goods are also made up goods. They are classifiable under CH6302 and will attract 5% GST as per SI.No224 of Schedule I of Notification No.1/2017 CT(R) incase if Selling price is less than Rs. I000/- and will attract 12% GST if selling pr....
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.... purchase invoices for all the products ii. The Test Report of Regional Laboratory Textiles Committee in respect of the products for which classification is sought iii. Photographs of made ups(latex block covers, pillow cover, mattress cover, foot runner & pillow sheet) iv. Production process photographs of Poly Propylene Extrusion Yarn, Poly Propylene Texturized Yarn, Polyester Texturized Yarn v. Note on Decitex They had also furnished the classification and rate of tax as per their understanding as below: Knitted Fabrics -CTH 6006; Woven Fabrics - CTH 5407; Woven Fabrics bonded with Non-woven Fabric - CTH 5407; Covers for Pillow, Latex Block, Mattresses - CTH 6304; Foot Runner, Pillow Sheet - 6302; Chenille Yarn - 5606; PP Extrusion yarn-5402; PP Texturized Yarn -5402; Polyester Texturized Yarn - 5402 4. The jurisdictional authority- Commissioner of Central GST & Central Excise, Coimbatore has furnished the comments on the questions raised by the applicant which is reproduced below verbatim: The views/comments of the Commissionerate, item wise, are furnished hereunder: (a) Knitted Fabrics/(b)Woven Fabrics/(c) Woven Fabrics bonded with Non-Woven Fabrics: * All wove....
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....ther they undergone any significant change in texture or not, after impregnation/lamination/ covering/coating. The products are classifiable under their respective Chapters of their constituent textile materials and leviable at 5% GST rate, when the fabrics do not undergo any significant change in texture. Otherwise, are classifiable under 5903/5907, which attract 12% GST rate. (e) Covers of Pillow, Latex Block, Mattresses: As per the write up given by the applicant, the products are very much identifiable in the respective Chapter sub-heading 6304 as other made up articles of textiles, which attracts GST of 5% when it is sold for <Rs. 1000/- & 12% when the selling price is >Rs. 1000/-. (f) Foot Runner and Pillow Sheet: As per the write up given by the applicant, the products are very much identifiable in the respective Chapter sub-heading 6302 as other made up articles of textiles, which attracts GST of 5% when it is sold for <Rs. 1000/- 85 12% when the selling price is >Rs. 1000/-. (g) Chenille Yarn: As per the write up given by the applicant, the products are very much identifiable in the respective Chapter sub-heading 5606 as "Chenille Yarn", which attracts GST rate of 12....
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....n the padder of the stenter machine, through which the fabric is run. After process, inspection is done and the fabrics are supplied. The applicant has opined that the product is classifiable under CTH 60. The test report 298/2019-20 of the Regional Laboratory, Textiles Committee states that the sample described as 'Knitted Fabric', is of Polyester (100%), Weft Knit Fabrics of yarns of different colours and the applicable HS code 6006.33- Other knitted fabrics, of synthetic fibers', of yarns of different Colours. . In the submissions, it is stated as raw material used is yarn-Polyester, cotton, Polypropylene Yarn. From the input purchase invoice, it is seen that they procure 1200 Denier Yarn, 600 Denier Yarn, 900 Denier Yarn 20s Polyester Yarn, 30s Polyester Yarn, 150 Dyed Yarn. Chapter Notes to Chapter 60 is as follows: CHAPTER 60 Knitted or crocheted fabrics NOTES : 1. This Chapter does not cover : (a) crochet lace of heading 5804 ; (b) labels, badges or similar articles, knitted or crocheted, of heading 5807 ; or (c) knitted or crocheted fabrics, impregnated, coated, covered or laminated, of Chapter 59. However, knitted or crocheted pile fabrics, impregnated, coated....
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.... Woven fabrics : The raw material used is Yarn-Polyester, POY, Chenille sourced from various mills. The applicant has stated that the yarn is warped at first and weaving is done in the jacquard machines. After weaving, the fabric is softened by Needle Punching, then on inspection the fabric is supplied. The applicant has opined that the product will fall under CTH 5407. The Test report 300/2019-20 describes the sample as Fabric(N and the test result states that Fabric I - both directions Polyester with composition .100% polyester and Fabric-II Non-Woven is of uni-directional polypropylene. The report describes the product as '100% Polyester Woven Filament Yarn Fabrics of yarns of different colours assembled in layers with 100% Polypropylene Non-Woven' and the applicable HS code 5407.53-Woven Fabrics, of synthetic filament yarn, other woven fabric, containing 85% or more by weight of Textured polyester filaments, of yarns of different colours'. As seen in the test report and the manufacturing process and the raw materials which is yarns of polyester, the woven fabrics are made of synthetic filament yarn. Section note 9 to section XI states 9.- The woven fabrics of Chapters 50 t....
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....cetate) ); or (b) by dissolution or chemical treatment of natural organic polymers (for example, cellulose) to produce polymers such as cuprammonium rayon (cupro) or viscose rayon, or by chemical modification of natural organic polymers (for example, cellulose, casein and other proteins, or alginic acid), to produce polymers such as cellulose acetate or alginates. The terms "synthetic" and "artificial", used in relation to fibres, mean: synthetic: fibres as defined at (a); artificial : fibres as defined at (b). Strip and the like of heading 5404 or 5405 are not considered to be man-made fibres. Chapter heading 5407 states: 5407 WOVEN FABRICS OF SYNTHETIC FILAMENT YARN, INCLUDING WOVEN FABRICS OBTAINED FROM MATERIALS OF HEADING 5404 Explanatory notes to chapter 5407 states -------------------------------------------- This heading cove's woven fabrics (as described in Part (I) (C) of the General Explanatory Note to Section XI) made of synthetic filament yarn or of mono (lament or strip of heading 54.04; it includes a very large variety of dress fabrics, linings, curtain materials, furnishing fabrics, tent fabrics, parachute fabrics, etc. From the submissions, it is cl....
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....old in market is woven fabric as it is the base material. As per the General Rules of Interpretation for HSN the classification of goods consisting of more than one material or substance shall be according to the principles of Rule 3. Rule 3a states that The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods. Also, Section XI Note 2 A of Customs Tariff Act states that Goods classifiable in Chapters 50 to 55 or in heading 5809 or 5902 and of a mixture of two or more textile materials are to be classified as if consisting wholly of that one textile materials which predominates by weight over any other single textile material. In the case of the product at discussion, the woven fabric made of synthetic filament yarn is the predominant material and the Non-woven fabric....
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....bed in any other sub-clause of this Note, but excluding fabrics the cut edges of which have been prevented from unravelling by hot cutting or by other simple means; (d) hemmed or with rolled edges, or with a knotted fringe at any of the edges, but excluding fabrics the cut edges of which have been prevented from unraveling by whipping or by other simple means; (e) cut to size and having undergone a process of drawn thread work; (f) assembled by sewing, gumming or otherwise (other than piece goods consisting of two or more lengths of identical material joined end to end and piece goods composed of two or more textiles assembled in layers, whether or not padded); (g) knitted or crocheted to shape, whether presented as separate items or in the form of a number of items in the length. Further Other made up textile articles' are classified in Chapter 63 of the Customs Tariff and Heading 6304 specifically mentions Bed covers, Pillow Covers, etc. For ease of reference, the same is extracted under: 6304 OTHER FURNISHING ARTICLES, EXCLUDING THOSE OF HEADING 9404 - Bedspreads : 63041100 -- Knitted or crocheted 630419 -- other : 63041910 --- Bedsheets a....
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....f Notification 1/2017 CT(R) dated 28.06.2017 as amended and SGST @6% as per S.No. 171 of Schedule II of Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017 7.5 Foot Runner So Pillow Sheet: The fabric involved in producing Foot runner and Pillow Sheet are Woven Fabric(manufactured in-house) and Paper silk Fabric(outsourced). The manufacturing process involves making the customer logo embroidery on the Omega Fabric through Computerized Embroidery machine at outsource, cut the fabrics to specification and stitched to get finished Pillow Sheets and Foot runners, which are quality checked, packed and supplied. The applicant claims classification under CTH 6302. Runner is generally used for upholstering and foot runner is nothing but fabric placed on the bed at the leg portion which is similar to bed linen. Similarly, Pillow Sheets are also nothing but made up equivalent to Bed linen used as sheets that is put on bed or pillow. These are made up articles as defined in Section Note 7 of Section XI and are classifiable in Chapter 63-Other made up articles of textiles. Specifically, CTH reproduced below for reference. 6302 BED LINEN, TABLE LINEN, TOIL....
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.... specifically under Heading 5606. For ease of reference, the said heading is given below: 5606 GIMPED YARN, AND STRIP AND THE LIKE OF HEADING 5404 OR 5405, GIMPED (OTHER THAN THOSE OF HEADING 5605 AND GIMPED HORSEHAIR YARN ); CHENILLE YARN (INCLUDING FLOCK CHENILLE YARN ); LOOP WALE -YARN 560600 - Gimped yarn , and strip and the like of heading 5404 or 5405 , gimped (other than those of heading 5605 and gimped horsehair yarn ); chenille yarn (including flock chenille yarn ); loop wale -yarn : 56060010 --- Trimmings, of cotton 56060020 --- Trimmings, of man-made fibres 56060030 --- Trimmings, of zari 56060090 --- Other And as per the Explanatory Notes(HSN), Chenille yarn is defined as under: (B) CHENILLE YARN (INCLUDING FLOCK CHENILLE YARN) Chenille yarn consists generally of two or more strands of textile yarn twisted together and gripping short ends of textile yarn that may be practically perpendicular to them, the strands arc sometimes maintained in loops formal on a hosiery loom. In all cases, it looks like yarn tufted with pile threads throughout its length. It is usually manufactured directly on special looms (ring Twister and Raschel knitting mac....
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.... After testing packed in boxes for export and is also captively used. The test report No. 306/2019-20 describes the product as '100% Polyester Filament Yarn(Textured)' falling under HS code 5402. All the three yarns above are synthetic yarns and are clearly classifiable under CTH 5402 when not put up for retail sale and under CTH 5406 when put up for retail sale. For ease of reference, the relevant tariff entries are given below: 5402 Synhetic filament yarn (other than sewing thread), not put up for retail sale, including synthetic monofilament of less than 67 decitex - Textured yarn : 54023100 -- Of nylon or other polyamides, measuring per single yarn not more than 50 tex 54023200 -- Of nylon or other polyamides, measuring per single yarn more than 50 tex 54023300 -- Of polyesters 54023400 -- of polypropylene 540239 -- Other : 54023910 --- Polypropylene filament yarn 54023920 --- Acrylic filament yarn 54023990 --- Other 540600 - Man-made filament yarn (other than sewing thread), put up for retail sale 54060010 --- Synthetic filament yarn 54060020 --- Artificial filament yarn It is observed that the rate notification ....
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....(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017 4. Covers for pillows made of knitted or woven fabrics are classifiable under CTH 63049239. Covers for latex blocks made of knitted or woven fabrics are classifiable under CTH 63049289. Cover for mattress made of knitted or woven fabrics are classifiable under CTH 63041990. The Goods attract CGST @ 2.5% in case selling price is less than Rs. 1000/piece as per SI.No.224 of Schedule I of Notification 1/2017 CT(R) dated 28.06.2017 as amended and SGST @2.5% in case selling price is less than Rs. 1000/ piece as per Sl.No. 224 of Schedule I of Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017 and in case of selling price more than Rs. 1000/piece then it will attract 6% CGST as per S.No. 171 of Schedule II of Notification 1/2017 CT(R) dated 28.06.2017 as amended and SGST @6% as per S.No. 171 of Schedule II of Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017. 5. Foot runners, pillow sheet made of knitted or woven fabrics are classifiable under CTH 63021090. They will attract CGST @ 2.5% in case selling price is less than Rs. 1000/piece as per Sl.No.224 of Schedule I of Notificat....