TaxTMI 
TaxTMI 
2020 (7) TMI 109
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....Chetty Pudur Post, Padhuvampalli Village, 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; Chenill....
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.... of heated licocene Glue (PP glue). After this the Woven fabric will be subjected to inspection 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 Shee....
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.... around 4 kg bobbins for getting better efficiency in fabric production. Small package leads frequent bobbin changes in feeding section of rapier loom but big package will eliminate 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/Cm^2). Thereafter, ....
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....: It will fall under 5407 and attracts 5% GST as per SI.No.217 Schedule I of Notification No.1/2017 CT(R) dated 28.07.2017 as amended. Woven fabric bonded with Non- woven fabric: The final product consists of two textile 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: The....
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....n, Poly Propylene Texturized Yarn, Polyester Texturized Yarn; sample export documents; sample sale invoice along with purchase order 3.3 Further, on 11.06.2019 they submitted the following documents: i. Raw Materials details along with sample raw material 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 & Cent....
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....ed fabrics, irrespective of their constituent materials i.e., Cotton (100%) or 100% of Polyester/Viscose/Rayon/Nylon or blended of any nature, attracts 5% rate with ITC facility under GST and classifiable under Tariff Heading from 60. By applying the above facts to the present case, the deciding factor to find the exact classification of the above fabrics is whether 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 i....
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....tured, gives a detailed description of the products classified under a particular heading. Considering all the submissions, we take up the classification of the products. 7.1 Knitted Fabrics: The raw material used is Yarn-Polyester, Cotton, Poly Propylene Yarn. The manufacturing process involves interloping of yarns through loop formation in Jacquard Knitting Machine, which is softened using chemicals applied on 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....
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....rovided. Further, as per the rate notification under GST, we find that the applicable rate of knitted fabrics is a single rate irrespective of their constituent materials, i.e., Cotton(100%) or 100% of Polyester/ Viscose/ Rayon/ Nylon or blended of any nature. The applicable rate is 2.5% CGST provided vide Sl.No.221 of Schedule I of Notification 1/2017 CT(R) dated 28.06.2017 as amended and 2.5% SGST provided vide S.No. 221 of Schedule I of Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017. 7.2 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 Ya....
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....se fabrics are not regarded as embroidered fabrics. Chapter note to chapter 54 states CHAPTER 54 Man-made filaments; strip and the like of man-made textile materials NOTES: 1. Throughout this Schedule, the term 'man made fibres' means staple fibres and filaments of organic polymers produced by manufacturing processes either: (a) by polymerisation of organic monomers to produce polymers such as polyamides, polyesters, polyolefins or polyurethanes, or by chemical modification of polymers produced by this process (for example, poly(vinyl alcohol)prepared by the hydrolysis of poly(vinyl acetate) ); 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 ....
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....- one direction Polypropylene, other direction Polyester with composition 60% polyester and 40% Polypropylene and Non-Woven portion - one direction polypropylene with 100% Polypropylene composition. The report describes the product as '60% Polyester 40% Polypropylene Woven Filament Yarn Fabrics of yarns of different colours assembled in layers with 100% Polypropylene Non-Woven' and the applicable HS code 5407.73-Woven Fabrics, of synthetic filament yarn, other woven fabric, containing 85% or more by weight of synthetic filaments of yarns of different colours'. It is observed that the final product consists of two textile material i.e. woven & Non-Woven fabric, the goods are sold 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 g....
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....tress, which are made as per the specifications of the customers. They are better identified as made up articles as defined under Section Note 7 of Section XI. For ease of reference, the said section Note is given below: 7. For the purposes of this Section, the expression "made up" means: (a) cut otherwise than into squares or rectangles; (b) produced in the finished state, ready for use (or merely needing separation by cutting dividing threads) without sewing or other working for example, certain dusters, towels, table cloths, scarf squares; blankets); (c) Cut to size and with at least one heat-sealed edge with a visibly tapered or compressed border and the other edges treated as described 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) assem....
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...., Handloom 63049992 ---- Of wool, Handloom 63049999 ---- Other As per Rule 1 of the General Rules of Interpretation, specific chapter heading is to be preferred than generic. Therefore, the covers for Pillow, Latex Block and Mattress are classified under CTH 6304. 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 classifiable under CTH 63 will attract CGST @ 2.5% in case selling price is less than Rs. 1000/piece as per Sl.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)/20....
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....6.2017 7.6 Chenille Yarn: The applicant has stated that they buy Raw materials like core and pile yarn from outside which are subjected to creeling, twisting and then wound on empty cops to form chenille cops weighing 300 gms. These cops are fed to winding machine to make big bobbins weighing around 2 kg. After winding, labels are pasted and sent to dye house, which is checked for quality and used in the weaving section for fabric production. The applicant has stated that the yarn is captively used but they may go for commercial sales. The test report No. 303/2019-20 is furnished wherein the customer sample reference is quoted as 'Chenille yarn'. The test results states that the yarn is polyester with 100% composition of Polyester with the description Polyester Chenille yarn' and HS code 5606. From the submissions, it is evident that the product is a type of special yarn obtained by a specified process and the composition of the yarn at hand is man-made filament. The product is classifiable in chapter 56 of the Customs Tariff- Wadding, felt and nonwovens; Special yarns; twine, cordage, ropes and cables and articles thereof;' and more specifically under Heading 5606. For ease of ....
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....ertain process, the yarn is wound on a paper cone which will be subject to testing and is captively used for manufacture of fabric. The applicant has stated that they may go for commercial sales. The test report furnished by the applicant No. 304/2019-20 states the description of the yarn as '100% Poly Propylene Filament Yarn' falling under HS code 5402. Poly Propylene Texturized Yarn: The raw material Polypropylene fully drawn yarn will be creeled on trolley, which will be threading to the godets through water jets, where water treatment is given and through air, where air jet is blown at 10 kg/cm2. Again threading to godets is carried out and then wound on paper cone. After testing packed in boxes for export and is also captively used. The test report No. 305/2019-20 describes the product as '100% Poly Propylene Filament Yarn(Textured)' falling under HS code 5402. Polyester Texturized Yarn: The raw material polyester partially Oriented yarn from outside is creeled on trolley, which will be threading to the godets through water jets, where water treatment is given and through air, where air jet is blown at 10 kg/cm2. Again, threading to godets is carried out and then wound o....
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....e above , we rule as under RULING 1. 'Knitted Fabrics' manufactured and Supplied by the applicant is classifiable under CTH 60. Further classification is not possible as only further technical details are not provided. The applicable rate is 2.5% CGST provided vide Sl.No.221 of Schedule I of Notification 1/2017 CT(R) dated 28.06.2017 as amended and 2.5% SGST provided vide S.No. 221 of Schedule I of Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No.62 dated 29.06.2017. 2. 'Woven fabric' manufactured and supplied by the applicant is classified under CTH 5407. Further classification is not possible as only further technical details are not provided The applicable rate is 2.5% CGST provided vide SI.No.217 of Schedule I of Notification 1/2017 CT( R) dated 28.06.2017 as amended and 2.5% SGST provided vide S.No. 217 of Schedule I of Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017. 3. 'Woven Fabric backing with Non-woven Fabric falls under CTH 5407. Further classification is not possible as only further technical details are not provided. The applicable rate is 2.5% CGST provided vide Sl.No.217 of Schedule I of Notification 1/2017 CT(R) ....