AI Drafter 
TaxTMI 
TaxTMI 
2021 (7) TMI 753
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.... ii) Whether "coir mats/ matting/ floor covering with vinyl (PVC) backing" manufactured by the process of embedding coir yarn into vinyl (PVC) compound and curing by heating / cooling is rightly covered under the description "coir mats matting and floor covering"? iii) Whether "coir mats / matting / floor covering with vinyl (PVC) baking" manufactured by the process of embedding coir yarn into vinyl (PVC) compound and curing by heating / cooling would merit classification under the heading 5705 (more specifically under CTH 5705 00 49) of Chapter 57 of the 1^st Schedule to the Customs Tariff? 3. The Authority for Advance Ruling Kerala issued Ruling vide order No. KER 84/2020 dated 20-05-2020 on the above issue in certain as follows:- i. Manufacture of PVC Tufted Coir Mats / Matting / Floor coverings by the process of embedding coir yarn into PVC cannot be considered as textile floor coverings of coir covered under HSN 5702,5703 or 5705. The process undertaken is a tufting process and if any, PVC or rubber or any other materials are tufted on the textile of coir, which is used as floor mats or matting, it will come under the Customs Tariff Head 5703 90 90 an....
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....eflon belt that is moving with the vinyl layer as mentioned above. In the cutting head station, as set of guillotine blades that run across the entire width of the machine chop the coir yarns into predetermined length. These bits of coir yarn later from the pile of the mat. The chopped coir yarns are at horizontal orientation at the time of chopping and they are then directly fed down a chute that turns it around 90 degrees to vertical orientation by the time they reach the top surface of the PVC compound moving underneath on the continuous Teflon belt. At this point, there is a reciprocating compacter that vertically pushes the short length of Cut coir yarns into the PVC compound just enough so that their lower and gets embedded in the PVC layer. In this way, with constant, regulated feed of coir yarn through the cutting head and feeding of vinyl compound on to the moving continuous layer of uncured vinyl and a substantially continuous series of cut coir yarn pieces (piles) extending up there from. That embryonic mat is then transported over the Teflon through progressive heating and cooling areas to cure the vinyl (PVC) compound so as to from a well cured vinyl (PVC) backing with....
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....er sub-heading 5703. Hence the impugned product can no way be classified under sub-heading 5703. 4.5 Attention is invited to Rule 1 of the General Rules of Interpretation of the 1^st Schedule - Import Tariff of the Customs Tariff Act, 1975. As per Rule 1, for legal purpose, classification shall be determined according to the terms of the heading and any relative section or chapter notes. As per chapter Note 1 of the Chapter 57, the term "carpets and other textile floor covering" means floor covering in which textile materials serve as the exposed surface of the article when in use and includes article having the characteristics of textile floor covering but intended for use for other purposes. From the above note, it is amply clear that the basis of classification of goods falling under Chapter 57 is on the basis of the textile materials which serve as the exposed surface of that article when put to use. It is further submitted thar in the case in hand, the textile materials which serve as the exposed surface of coir mats with vinyl (PVC) backing is nothing but coir and hence such article needs to be classified as coir mats / matting products only. Further, it is submitted th....
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....s and other textile floor covering" which falls under HS heading No. 5705. The authority may be pleased to see that, though the test report was placed on record before the original authority at the time of hearing the same had not found a place in the impugned order. As all the above tests of classification such as essential character test, market / trade parlance test etc. and more so the definition in Chapter note 1 of Chapter 57, would suggest that the impugned goods are to be classified as coir mats/matting floor covering, the authority may be pleased to classify the impugned goods as coir mat/ matting/ floor covering. 4.8 As per Explanatory note 1 to the General Rules for interpretation of Customs tariff. "Wherein Column (2) of the schedule the description of an article or group of article under the heading is prescribed by "-" the said article or group of articles shall be taken to be a sub-classification of the article group of articles covered by the said heading. Where however the description of an article or group of article is preceded by "-", the said article or group of articles shall be taken to be a sub classification of the immediately preceding de....
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....peal memorandum and the grounds of appeal filed by the appellant before this authority and those including video presentation made/submitted during the course of personal hearing, and other evidence on record. The issue for determination before this authority is listed as follows:- a. Whether the process of manufacture (embedding coir yarn into vinyl (PVC) compound and curing by heating / cooling) id "Tufting" or a process "other than those processes mentioned in heading 5701 to 5704" Customs Tariff and the HSN Explanatory Notes to Chapter 57? b. Whether "coir mats / matting /floor covering with Vinyl (PVC) backing" manufactured by the process of embedding coir yarn into vinyl (PVC) compound and curing by heating / cooling is rightly covered under the description "coir mats, matting and floor covering"? c. Whether "coir mats / matting / floor covering with vinyl (PVC) backing" manufactured by the process of embedding coir yarn into vinyl (PVC) compound and curing by heating / cooling, would merit classification under the Heading 5705 (more specifically under CTH 5705 00 49) of Chapter 57 of the 1^st Schedule to the Customs Tariff? 7. Before we examine ....
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....or cut pile loop pile carpet mats with jute, rubber latex metre, whichever is higher or PU foam backing m2 57032090 --- Other m2 570330 - Of other man -made textile materials : 57033010 --- Carpets, carpeting and rugs m2 57033020 --- 100% polypropylene carpet mats with jute, rubber, latex or PU foam backing m2 57033090 --- Other m2 570390 - Of other textile materials : 57039010 --- Carpets and other floor coverings, of cotton , other than durries m2 57039020 --- Carpets and floor coverings of Coir m2 57039090 --- Other m2 5705 OTHER CARPETS AND OTHER TEXTILE FLOOR COVERINGS, WHETHER OR NOT MADE UP 570500 - Other carpets and other textile floor coverings, whether or not made up : --- Carpets : 57050011 ---- Of silk m2 57050019 ---- Other m2 --- Durries : 57050021 ---- Durries cotton m2 57050022 ---- Durries of man-made fibres m2 57050023 ---- Durries of wool m2 57050....
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....m/sub-heading /chapter shall be done using the General rules of interpretation of the First Schedule of the Customs Tariff Act, 1975 including the Section and Chapter Notes and the General Explanatory Notes to HSN of the First Schedule of the CTA, 1975 Rule 1 of the General Rules of interpretation of tariff states that the titles of section, chapter and sub-chapter are provided for case of reference for legal purpose, classification shall be determined according to the terms of the heading or Notes do not otherwise require according to the provisions of Rule 2 and Rule 3. 12. In view of above legal provisions, it is to be examined that under which HSN the impugned product is appropriately classifiable for deciding the rate of GST applicable to it. Schedule II of the Notification No. 1/2017 dated 28/06/2017 specifies the products with Sl.No. 142 to 146 leviable to GST @ 12% as follows: S.No. Chapter /Heading /Sub-heading / Tariff item Description of Goods 142. 5701 Carpets and other textile floor coverings, knotted, whether or not made up 143. 5702 Carpets and other textile floor coverings, woven, not tufted or flocked, whether or not made up, including....
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....of manufacture indicated that the impugned products is manufactured by using sophisticated machines, mainly tufting machine as revealed from the video presentation made by the appellant during the course pr personal haring. However the main contention of the appellant is that no tufting process is applied in this case. We find that the term tufting is not tufting process is applied in this case. We find that the term tufting is not defined anywhere in the Customs tariff. I order to find out that whether the process of manufacture explained by the appellant come under tufting or a process other than those processes mentioned in heading 5701 to 5704, meaning of the word "Tufting" is to be looked into. 16. The HSN explanatory note to chapter heading 5703 provides that this heading covers tufted carpets or floor covering produced on tufting machine which, by means of a systems needles and hooks, inserts textile yarn into a pre-exiting hacking (usually a woven fabric or nonwoven) thus producing loops, or if the needles and hooks are combined with a cutting device, tufts. The yarns forming the pile are than normally fixed by a coating or rubber of plastics. Usually before the coating ....
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....ets embedded in the PVC layer. In this way with consistent, regulated feed of coir yarn through the cutting head and feeding of vinyl compound on to the moving, continuous layer of uncured vinyl and a substantially continuous series of cut coir yarn pieces (piles) extending up there from. That embryonic mat is than transport over the Teflon belt through progressive heating and cooling areas to cure the vinyl (PVC) compound s as to from as well cured (PVC) backing with evenly cut coir yarns piles firmly embedded in it vertical orientation. This forms the finished coir mat with Vinyl (PVC) backing. It may further be sheared to have a more even surface and cut to required size, as needed. From the aforesaid process and the video presentation of the manufacturing process made during hearing it is revealed that the process of manufacturing of the impugned products can correctly be termed as tufting and the products gets covered under heading 5703 in terms of the HSN explanatory note to heading 5703 as detailed above. Hence the plea of the appellant that they did not apply process if tufting is without any force and is accordingly rejected. 18. We further find that the appellant has p....