TaxTMI 
TaxTMI 
2021 (1) TMI 585
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....plastic on the fabric; that the said layer however, does not create an unbroken, uninterrupted or comprehensive plastic layer but only partially covers the fabrics with pulverized plastic having a 'dot matrix' design and does not make the material completely impervious as is the case of fabric where the plastic layer is installed as a skin and is whole and uninterrupted. 2. The applicant has submitted that under the erstwhile Central Excise regime, the fusible interlining fabrics were initially classified under various chapters from chapter 50 to 55 of the tariff depending upon the nature of the fabrics; that the said understanding was not only prevalent in the market but was also confirmed by virtue of clarification issued by the board; that by virtue of amendment to the Central excise Tariff made vide Finance Act, 1989, the classification of the said product was changed in a manner that the said goods were thereafter, classifiable under Chapter Heading 5903; that all the manufacturers of the said product, thereafter started clearing the said goods under Chapter Heading 5903 of the erstwhile Tariff; that on the basis of the clearance pattern adopted by other manufacturers, the ....
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....er: "Textile fabrics, partially or discretely coated with plastic by dot printing process (heading no.59.03)" 4. The applicant further submitted that before introducing the said amendment, the Board had vide Circular dated 02.09.1988 earlier clarified that fusible interlining cloth, to merit classification as coated fabrics under CETH 5903, should meet the following requirements: (a) It should have a continuous and adherent film or layer of plastic on one side of the fabric surface. (b) The fabric should be impervious. (c) It should satisfy the conditions prescribed in Note 2 of Chapter 59. 5. The applicant has submitted that the said clarification was however, amended vide telex dated 30.09.1988 by virtue of which the requirement of plastic layer being "continous" was removed and another Circular No.5/89 dated 15.06.1989 was also issued by the Board around the same time, clarifying that new note was being introduced in Chapter 59 of the Tariff in order to include fusible interlining cloth made by discrete coating of plastic by dot matrix process in Chapter Heading 5903; that in the said circular, it was also clarified that prior to such am....
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....sion Bench of the Madras High Court dismissed the Writ Appeal and upheld the judgement of the Single Judge as regards the quashing of the circular in view of Section 37B of the Central Excise Act, however no opinion was rendered on the merit of the case and the assessing officer was directed to adjudicate the matter on its own merits; that upon adjudication of the case by the assessing authorities, the issue was held against M/s. Madura Coats pvt.ltd. which became a subject matter of appeal being Appeal No.E/31/2012-DB before the Appellate Tribunal, Chennai; that in the said appeal, the Appellate Tribunal vide order dated 19.06.2018, upheld the contention of M/s. Madura Coats and confirmed that classification of the goods could not be made under Chapter 59 of the Tariff after deletion of the Note 2(c) to Chapter 59; that while coming to the said conclusion, the Appellate Tribunal noted and observed that introduction of Note 2(c) was merely to widen the types of textile fabrics which could be brought under the fold of CETH 5903 and after deletion of Note 2(c), the classification under Chapter 59 would have to be done by keeping in view the existing Chapter Note 2(a) as also the Circ....
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....re at temperature between 15C to 30C. 4. The fabric is not completely embedded in plastic. 5. Product is coated on one side only. 6. The product is covered with plastic polymer on one side and bears a design like a dot matrix design resulting from coating process. 7. The fabric is porous and pervious. The product is cotton fusible interlining. 9. The applicant has stated that on perusal of the test report, it can be seen though there is a coating on one side of the fabric but such coating is porous and pervious and does not completely restrict/prohibit passing of liquid/air through it; that it can be noted that such application of plastic is very thin and cannot be seen with naked eye as a film; that keeping the aforesaid facts in mind, the scope of Chapter 52 and 59 of the erstwhile Central Excise Tariff may be seen and noted; that Chapter 52 covers within its fold various cotton products in the form of yarns, fabrics etc. whereas Chapter 59 on the other hand covers goods in the nature of impregnated, coated, covered or laminated textile fabrics, textile articles of a kind suitable for industrial use; that Chapter Heading 5903 under the sa....
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....in note 2 to the said Chapter, fabrics which are partially coated or covered bearing designs resulting from such treatments otherwise falling are excluded from the purview of Chapter Heading 5903 and are observed to fall under Chapter 50 to 55, 58 or 60 and reference may be invited to Circular dated 02.09.1980 of the Board clarifying that fusible interlining cloth, to merit classification as coated fabrics under CETH 5903, should meet the following requirements: a) It should have a continuous and adherent film or layer of plastic on one side of the fabric surface. b) The fabric should be impervious. c) It should satisfy the conditions prescribed in Note 2 of Chapter 59. 11. The applicant has further stated that the said clarification was however, amended vide telex dated 30.09.1988 by virtue of which the requirement of plastic layer being 'continuous' was removed but the remaining portion of the clarification remained in force; that comprehensive reading of the tariff chapters as also the circular issued by the Board in this regard makes it amply clear that cotton fabric to be classifiable under Chapter Heading 5903 would have to satisfy the twin condi....
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....chedule shall, so far as may be, apply to the interpretation of this notification; that therefore, reference to woven fabrics of cotton under Chapter Heading 5208 to 5212 in the schedule to the said notification is the same as provided under Chapter Heading 5208 to 5212 of the Customs Tariff; that the structure of the tariff under the erstwhile Central Excise Tariff as also the Customs Tariff are both based on and aligned with the internationally accepted common classification system popularly referred to and known as 'Harmonized System of Nomenclature'; that a perusal of the Customs Tariff in respect of goods falling under Chapter 52 and 59 would show that the same is identical to Chapter 52 and 59 of the erstwhile Central Excise Tariff; that woven fabrics of cotton which were earlier classifiable under Chapter Heading 5208 to 5212 of the erstwhile Central Excise Tariff, are also covered under Chapter 5208 to 5212 of the Customs Tariff; that similarly the Note 2(c) which was the entire basis for changing the classification from Chapter 52 to 59 of the erstwhile Central Excise Tariff and which was subsequently deleted, also does not find any reference under the Customs Tariff Act; ....
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....he Board had vide Circular dated 02.09.1988 clarified that fusible interlining cloth, to merit classification as coated fabrics under CETH 5903, should meet the following requirements: (i) It should have a continuous and adherent film or layer of plastic on one side of the fabric surface. (ii) The fabric should be impervious. (iii)It should satisfy the conditions prescribed in Note 2 of Chapter 59. c) By virtue of amendment to the Central excise Tariff made vide Finance Act, 1989, Note 2(c) came to be introduced in Chapter 59 of the tariff to provide that fusible interlining cloth made by discrete coating of plastic by dot matrix process would be classified under Chapter Heading 5903 with effect from 01.03.1989. Also, another Circular No.5/89 dated 15.06.1989 was also issued by the Board around the same time, clarifying that new note was being introduced in Chapter 59 of the Tariff in order to include fusible interlining cloth made by discrete coating of plastic by dot matrix process in Chapter Heading 5903. The said note read as under: "Textile fabrics, partially or discretely coated with plastic by dot printing process (heading no.59.0....
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.... adjudication of the case by the assessing authorities, the issue was held against M/s. Madura Coats pvt.ltd. which became a subject matter of appeal being Appeal No.E/31/2012-DB before the Appellate Tribunal, Chennai. j) The Appellate Tribunal, Chennai, by Order No.41941/2018 dated 19.06.2018 in the case of M/s.Madura Coats pvt.ltd. vs. Commissioner of Central Excise in Appeal No.E/31/2012 had held that the product 'Fusible Interlining Fabrics of Cotton' were not classifiable under Chapter 5903 but was correctly classifiable under Chapter 52 of the erstwhile Tariff stating that the very basis for changing the classification i.e. Note 2(c), which was introduced in Chapter 59, has thereafter been deleted w.e.f. 16.03.1995 and therefore, the position as existed prior to introduction of the said note would be restored; k) With effect from introduction of Note 2(c), the applicant was classifying their said goods under Chapter Heading 5903 like all other manufacturers of the said product and the said classification was retained by the applicant when transition was made from the erstwhile Central Excise legislation to the present Goods and Service Tax regime. l....
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....rther, the Tariff Act is aligned to the Harmonised System of Nomenclature and it is a settled position of law that the reference to the Explanatory Notes to the HSN code is admissible for answering any question of classification. 18. To begin with, we will be required to refer to the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) for referring to Heading 5903. Heading 5903 appears in Chapter 59 of the said Tariff which reads as "Impregnated, coated, covered or laminated textile fabrics; textile articles of a kind suitable for industrial use" and reads as under: 5903 TEXTILE FABRICS, IMPREGNATED, COATED, COVERED OR LAMINATED WITH PLASTICS, OTHER THAN THOSE OF HEADING 5902 5903 10 - With polyvinyl chloride : 5903 10 10 --- Imitation leather fabrics of cotton 5903 10 90 --- Other 5903 20 - With polyurethane : 5903 20 10 --- Imitation leather fabrics, of cotton 5903 20 90 --- Other 5903 90 - Other: 5903 90 10 --- Of cotton 5903 90 20 --- Polyethylene laminated jute fabrics 5903 90 90 --- Other 19. Chapter Notes to Chapter 59 of the First Schedule to the Customs Tariff Act, 1975 ....
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..... For the purposes of heading 5906, the expression "rubberised textile fabrics" means: (a) textile fabrics impregnated, coated, covered or laminated with rubber: (i) weighing not more than 1,500 g/m2; or (ii) weighing more than 1,500 g/m2 and containing more than 50% by weight of textile material; (b) fabrics made from yarn, strip or the like, impregnated, coated, covered or sheathed with rubber, of heading 5604; and (c) fabrics composed of parallel textile yarns agglomerated with rubber, irrespective of their weight per square metre. This heading does not, however, apply to plates, sheets or strip of cellular rubber combined with textile fabric, where the textile fabric is present merely for reinforcing purposes (Chapter 40), or textile products of heading 5811. 5. Heading 5907 does not apply to: (a) fabrics in which impregnation, coating or covering cannot be seen with the naked eye (usually Chapters 50 to 55, 58 or 60); for the purpose of this provision, no account should be taken of any resulting change of colour; (b) fabrics painted with designs (other than painted canvas being theatrical scenery,....
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.... a kind used for technical purposes [for example, textile fabrics and felts, endless or fitted with linking devices, of a kind used in paper making or similar machines (for example, for pulp or asbestos-cement), gaskets, washers, polishing discs and other machinery parts]. 20. Explanatory notes to HSN in respect of Heading 5903 reads as under: This heading covers textile fabrics which have been impregnated, coated, covered or laminated with plastics (e.g., poly(vinyl chloride)). Such products are classified here whatever their weight per m2 and whatever the nature of the plastic component(compact or cellular), provided: (1) That, in the case of impregnated, coated or covered fabrics, the impregnation, coating or covering can be seen with the naked eye otherwise than by a resulting change in colour. Textile fabrics in which the impregnation, coating or covering cannot be seen with the naked eye or can be seen only by reason of a resulting change in colour usually fall in Chapters 50 to 55, 58 or 60. Examples of such fabrics are those impregnated with substances designed solely to render them crease-proof, mothproof, unshrinkable or waterproof (....
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....n book binding, as adhesive tapes, in the manufacture of electrical equipment etc. This heading also excludes: (a) Quilted textile products of heading 58.11 (b) Textile fabrics coated or covered with plastics for use as floor coverings (heading 59.04). (c) Textile fabrics, impregnated or coated, having the character of wall coverings(heading 59.05). (d) Textile fabrics, impregnated, coated, covered or laminated with plastics made up as described in Part(II) of the General Explanatory Note to Section XI. 21. We have thoroughly gone through the above and find that the dispute regarding classification of fusible interlining cloth, which is partially coated with plastic by the dot printing process i.e. whether it is covered under Chapter 52 to 55 or Chapter 59, has repeatedly come up before different authorities. In it's Circular No.24/Coated Fabric/88-CX.1 dated 02.09.1988, CBEC has referred to the production process. The finished woven fabric passed over preheated rolls having a high surface temperature and the heated substance was then pressed to a printing roll having fine dots engraved on it. High-density polyethylene powder was take....
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....7.11.1998, such classification should be treated as an exception to Chapter Note 2(a)(4) to Chapter 59. 21.2 The Appellate Authority for Advance Ruling, West Bengal in order dated 19.03.2020 in the case of Appeal Case No. 15/WBAAAR/APPEAL/2019 dated 26/09/2019 filed by M/s. Sadguru Seva Paridhan pvt.ltd. stated as under in respect of Circular No.433/66/98-CX.6 dated 27.11.1998 in Para-3(v) to (vii) of the said order: "(v) While striking down the above mentioned Circular No. 433/66/98-CX-6 dated 27/11/1998 as ultra vires and contrary to Section 37B of the Central Excise Act, 1944, the Ld. Single Bench of Madras High Court in the case of Madura coats reported in 2004(163) ELT 164(Mad.), took no notice of the applicability of the Explanatory Notes to the HSN Code in deciding a classification issue under the Excise Tariff. Although not stated explicitly, the court held the interpretation of the law, as made in Circular No. 5/89 dated 15/06/1989, a binding legal provision, and the contrary view is illegal and ultra vires. (vi) Upon appeal, the division Bench of the Madras High Court, in its order dated 05/01/2009 in WA No. 507 of 2005, refrained from expressing any ....
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....e of providing a bond to other fabrics or materials on the application of heat and pressure. In the absence of any such submission, it is reasonable to agree with the views expressed by CBEC in Circular No. 433/66/98-CX-6 dated 27/11/1998 that fusible interlining cloth is classifiable under Heading 5903. In view of the above, we find that the product 'fusible interlining fabric of cotton' of the applicant would be classifiable under Heading 5903 only. 22. Further, we would also like to draw attention to the explanatory notes to HSN (with respect to Heading 59.03) (as narrated in para-14 above) that products fulfilling the conditions (1) to (3) mentioned therein would be covered under the Heading 59.03. In this context, the applicant has got a sample of fabric of 'Fusible interlining Cotton' tested from Ahmedabad Textile Industry's Research Association (ATIRA) and has submitted a copy of the test report dated 02.08.2018. As per data available online, we find that Ahmedabad Textile Industry's Research Association (commonly known as ATIRA) is an autonomous non-profit association for textile research located in Ahmedabad and is the largest association for textile research & allied i....
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....ded in, nor coated or covered on both sides with, plastics. The fabric is not completely embedded in plastic. It is covered with plastic polymer on one side and bears a design like a dot matrix design resulting from coating process. Condition 1: states that impregnation, coating or covering must be seen with the naked eye. As per the test results, polymer coating cannot be seen with the naked eye but film coating is visible with the naked eye. We find that film coating also involves coating with natural or synthetic polymeric substance (plastic). Even otherwise, the condition only stipulates that coating must be visible with the naked eye but does not mention polymer coating or film coating, hence this condition is fulfilled. Condition 2: is fulfilled as the product can be bent without fracturing around a cylinder of a diameter 7m or more at temperature between 15 degrees C to 30 degrees C. Condition 3: is fulfilled as the fabric is not completely embedded in plastic but is covered with plastic polymer on one side and bears a design like a dot matrix design resulting from coating process. In view of the above, since all the 3 conditions as specified....
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.... 5209 12 -- 3-thread or 4-thread twill, including cross twill : 5209 19 00 -- Other fabrics - Bleached : 5209 21 -- Plain weave : 5209 22 -- 3-thread or 4-thread twill, including cross twill : 5209 29 -- Other fabrics : 5209 31 -- Plain weave : 5209 32 -- 3-thread or 4-thread twill, including cross twill : 5209 39 -- Other fabrics : 5209 41 -- Plain weave : 5209 42 00 -- Denim 5209 43 -- Other fabrics of 3-thread or 4-thread twill, including cross twill : 5209 49 -- Other fabrics : 5209 51 -- Plain weave Lungis 5209 52 -- 3-thread or 4-thread twill, including cross twill : 5209 59 -- Other fabrics : 5210 WOVEN FABRICS OF COTTON, CONTAINING LESS THAN 85% BY WEIGHT OF COTTON, MIXED MAINLY OR SOLELY WITH MAN-MADE FIBRES, WEIGHING NOT MORE THAN 200 G/M2 - Unbleached : 5210 11 -- Plain weave : 5210 19 00 -- Other fabrics m2 - Bleached : 5210 21 -- Plain weave : --- Other : 5210 29 -- Other fabrics : - Dyed : 5210 31 -- Plain weave : 5210 32 -- 3-thre....
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....g clothing, household linen, bedspreads, curtains, other furnishing articles etc. The heading does not include: (a) Bandages, medicated or put up for retail sale (heading 30.05) (b) Fabrics of heading 58.01. (c) Terry toweling and similar terry fabrics(heading 58.02). (d) Gauze(heading 58.03). (e) Woven fabrics for technical uses of heading 59.11. 24.3 Explanatory notes to HSN with respect to Headings 5210 and 5211 read as under: This heading covers woven fabrics as defined in Part(I)(C)of the General Explanatory Note to Section XI. It covers these fabrics provided they are classified as cotton fabrics by the application of Note 2 to Section XI (see also Part (I)(A) of the General Explanatory Notes to Section XI) and provided they meet the following specification: (a) Contain less than 85% by weight of cotton. (b) Are mixed mainly or solely with man-made fabrics. (c) Weigh not more than 200 g/m2. The heading does not include: (a) Bandages, medicated or put up for retail sale (heading 30.05) (b) Fabrics of heading 58.01. (c) Terry toweling and similar terry fabrics....