TaxTMI 
TaxTMI 
2022 (1) TMI 745
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....is registered under the GST Vide GSTIN 33ACSPB3904E1Z0. The applicant is engaged in the business of buying and selling fabrics, including micro-dot fusible interlining manufactured by various manufacturers. The applicant has sought advance ruling on the following question.- Whether Fusible Interlining Fabrics of Cotton (FIFC) fall for classification under HSN Code 5903 or under Chapter 52(heading depending upon weightage of cotton in the fabrics) The Applicant has submitted the copy of application in Form GST ARA - 01 and also submitted a 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 engaged in the business of buying and selling fabrics, including micro-dot fusible interlining manufactured by various manufacturers such as Madura Coats Limited, The Ruby Mills Limited etc., They have stated that Interlining is a layer of fabric inserted between the shell fabric and the lining of a garment to give a suitable appearance and stability. FIFC are 100% cotton fabrics which have been subjected to a "powder dot coating process". Under this process....
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....g upon the primary content of the fabric. 2.3 The applicant has made reference to Chapter 52 and Tariff Heading 5903 relevant to FIFC of the Central Excise Tariff. They have summarized the chapter notes to chapter 59 amended from time to time. SI.No Date of amendment Particulars/ language of the Chapter note 1 Chapter Note 2 to Chapter 59 of the Central Excise Tariff Act, 1985 as applicable up to 28.02.1989 2. Heading 5903 applies to: (a) textile fabrics, impregnated, coated, covered or laminated with plastics, whatever the weight per square metre and whatever the nature of the plastic material (compact or cellular), other than: (1) fabrics in which the impregnation, coating or covering cannot be seen with the naked eye (usually Chapters 50 to 55, Chapter 58 or 60); for the purpose of this provision, no account should be taken of any resulting change of colour; (2) products which cannot, without fracturing, be bent manually around a cylinder of a diameter of 7 mm, at a temperature between 15°C and 30°C (usually Chapter 39); (3) products in which the textile fabric is either completely embedded in plastics or entirely coated or covered on both sides with such m....
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....ed. The applicant has submitted that in view of the aforesaid 1998 CBEC Circular having been quashed by the Hon'ble High Court of Madras, fusible interlining cloth cannot be classified under HSN Code 5903. Further, the cumulative effect of this judgement and the deletion of Note 2(c) to Chapter 59 in 1995, is that the classification of FIFC must be under Chapter 52, on the basis of Circular No. 5/89 dated 15.06.1989. The applicant has also submitted that then-contention is arrived at on the basis of the reasoning set out in Madura Coats Private Limited vs CCE, Tirunelveli [2019 (365) ELT 345 (Tri Chennai)] where it has been held that includability under HSN Code 5903 came to an end on 16.03.1995 with the deletion of Chapter Note 2(c) to Chapter 59 and that with effect from this date, whether any fabric could be classified under HSN Code 5903 would be determined on the basis of Chapter Note 2(a) read with CBEC circular of 1988. various amendments, clarifications and litigations that have taken place in respect of tariff entries and Chapter Notes for Chapter 52 and IISN 5903. The applicant has stated that the fusible interlining fabrics supplied by them includes the product manuf....
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....duct manufactured by Madura Coats Private Limited, and therefore, per the decision of the Hon'ble CESTAT in Madura Coats Private Limited vs. CCE, Tirunelveli [2019 (365) ELT 345 (Tri. Chennai) the said goods would not be classified under HSN code 5903. Further, the applicant has also relied upon the ruling issued by the Advance Ruling Authority of Uttarakhand in the case of Goods wear Fashion Private limited. 2.6 In view of the aforesaid submissions, the applicant has requested the Hon'ble Authority to make a ruling that FIFC in the present case, which is partially covered with plastic and bears a pattern on one side should be classified under Chapter 52. 3.1 The applicant was given an opportunity to be personally heard on 28.01.2020, however they sought adjournment. The applicant was again personally heard on 11.02.2020. Shri. Udayan Choksi, Authorised Representative, appeared before the authority and submitted sample test report, Central Excise Tariff charges and case laws to justify that they are classifiable under CTH 52 or 5209. They stated that they do trading of the product and manufacturing process involves powder dot coating process. They stated that this means t....
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....akhand in the case of Good wear Fashion (p) Ltd. 3.3 Due to the prevailing pandemic situation the applicant was addressed through their email seeking their willingness to participate in the hearing in digital mode. The applicant consented and the authorised representative appeared for virtual hearing on 16.12.2020. He requested to have a personal hearing considering the various submissions and issue being of classification. He requested for adjournment which was acceded to. 3.4 The applicant was again given an opportunity to be personally heard on 05.03.2021. However, the applicant sought adjournment and the applicant was heard on 12.03.2021. The authorised representative appeared for the hearing. He furnished the written submissions along with exhibits 1 to 5 which was taken on record. He also furnished copies of the two Gujarat AAR rulings, West Bengal AAR & AAAR, Uttarakhand AAR wherein the applicants are manufacturers but not traders like the applicant. The authorised representative has emphasized the Chapter Notes of 59, to be tested separately. If their products/fabrics passed any of the test then their products fall in that categories. In their case, they have not satisfie....
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.... cotton containing 85% or more by weight of cotton. Weighing more than 200 g/m2 bleached: other fabrics 5% 3 Ruby 590390 Textile fabrics, impregnated, coated, covered or laminated with plastics, other than those of heading 5902 other: of cotton 12% The officers also unpacked a bundle received by the dealer on 22.10.2021 which is purchased directly from Ruby Mills. The details of the samples are as below: Sl.No Particulars HSN HSN Description GST Rate 1 Ruby 590390 Textile fabrics impregnated coated covered or laminated with plastics other than those of heading 5902 other: of cotton 12% 4.1 The applicant was also given another opportunity to be personally heard on 26.11.2021. The Authorised representative appeared for the hearing and reiterated the submissions. He stated that the issue involved is the classification of FIFC, whether they are classifiable under CTH52 or 59. They stated that the product does not satisfy the condition at CTH59, Chapter note 2(4). The samples drawn by the department, presented before the members were examined. They stated that the design on the product is based on the Roller & Hopper and requested that a ruling may be passed in respect....
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....cer vide their letter dated 27.12.2019 submitted the following comments on the issue raised by the applicant in their application. a. Prior to the introduction of Chapter Note 2(c) in Chapter 59. the CBEC had issued a Circular No.24/Coated Fabrics/88-CX. 1, dated 02.09.1988, which concluded that textile fabrics including the fusible inter-lining cloth to merit classification as coated fabrics under Heading 59.03 of Central Excise Tariff, should have a continuous and adherent film or layer or plastic on one side of the fabric surface and the fabric should be impervious and satisfy the conditions prescribed in Note 2 of Chapter 59. In respect of the above, it is stated that the dot printing done by the manufacturers of FIFC is not continuous. Further such dot printing done in the FIFC manufacturing process does not render the fabric impervious and that the design created can be easily penetrated. Hence, the conditions are not fulfilled, the FIFC cannot be classified under the HSN code 5903. b. In Circular No.5/89, dated 15.06.1989, it was clarified that the fusible interlining cloth made by discrete coating with plastic by dot printing process have been specifically included in C....
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.... Limited, and therefore the decision of the Honourable CESTAT in Madura Coats Private Limited vs. CCE, Tirunelveli, the said goods would not be classified under the HSN code 5903 e) Authority for Advance Ruling GST. Uttarakhand, F.No.09/State Tax-UK/GST/Sec-97/2018-19/D.dun/0195. dated 30.01.2019 The specimen fabric i.e. "Polyester Viscose fusing Interlining Woven Fabric, partially covered with plastic which leads to plastic coated pattern that is visible on its one side" does not fall under HSN Code 5903. However, it being partially coated or partially covered with plastics and bearing designs will fall under chapter 50 to 55. 58 or 60 as per the chapter note 2(a)(4) of the Chapter 59 of the GST Tariff. Based on the circulars and references, I submit that when Chapter Note 2(c) itself is no longer in existence, and the FUSIBLE INTERLINING FABRICS OF COTTON (FIFO) otherwise did not satisfy the requirements laid down in Chapter Note 2(a) read with CBEC Circulars, cannot be classified under Central Excise Tariff Head 59.03. However it being partially coated or partially covered with plastics and bearing designs will fall under chapters 50 to 55, 58 or 60 as per the chapter note 2(a....
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....he application, submissions made during the hearing and thereafter, the samples presented before us and the submissions of the Jurisdictional authorities. The question on which the ruling is sought is,- Whether Fusible Interlining Fabrics of Cotton (FIFC) fall for classification under HSN Code 5903 or under Chapter 52(heading depending upon the weightage of cotton in the fabrics) The applicant in the case at hand is engaged in the business of buying and selling fabrics, including micro-dot fusible interlining manufactured by various manufacturers and supplies to the retailers. The applicant has sought the classification of the product being supplied by them. The said question is admissible under the provisions of Section 95/97 (2) of the Act and therefore admitted. 7.1 From the various submissions before us, we find that the applicant purchases Fusible Inter-lining Fabrics of cotton (FIFC) from various manufactures like Madura Coats Limited, Ruby Mills Lts, TALCO, etc. The said products are purchased under a Tax Invoice from the manufacturers, i.e., the goods stands assessed at the initial stage. However, the applicant has sought classification of the already assessed products ....
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....nder CETH 5903 * Chapter Note 2(a) of Chapter 59 of the Customs Tariff provides that all textile fabrics impregnated, coated, covered or laminated with plastics fall under Heading 5903 except for the exclusions at (1) to (5) thereunder, which fix classification under alternative chapters. These exclusions are separate and independent and need to be considered individually * Chapter Note 2(a)(4) of Chapter 59 places fabrics that are partially coated or partially covered with plastics and bearing designs resulting from these treatments under Chapter 50 to 55, 58 or 60 and once this test is satisfied, classification under Chapter Heading 5903 is excluded * Based on the test report obtained by them,- * The fabrics from the different manufacturers were identical in all respects; and * All the technical requirements under Chapter Note 2(a) are not met as exclusion at (4) applies * The Jurisdictional authority has stated that FIFC must be classified under CTH 52-55 and not under Heading 5903 8.1 The process of manufacture or the technical literature adopted by different manufacturers are not before us but the test reports provided by the applicant from two different labs take....
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....combined with textile fabric, where the textile fabric is present merely for reinforcing purposes (Chapter 39); or (6) textile products of heading 5811; The Explanatory Notes to the said Chapter Note and Chapter Heading as per the HSN are as follows: Explanatory Notes to Chapter Note 2: 2. Heading 59.03 applies to : (a) Textile fabrics, impregnated, coated, covered or laminated with plastics, whatever the weight per square metre and whatever the nature of the plastic material (compact or cellular), other than : (1) Fabrics in which the 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; (2) Products which cannot, without fracturing, be bent manually around a cylinder of a diameter of 7 mm, at a temperature between 15 °C and 30 °C (usually Chapter 39); (3) Products in which the textile fabric is cither completely embedded in plastics or entirely coated or covered on both sides with such material, provided that such coating or covering can be seen with the naked eye with no account being taken of any resulting ch....
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.... with plastics and bearing designs resulting from these treatments usually fall under Chapters 50 to 55, 58 or 60 8.3 In the case at hand, it is stated by the applicant that the process the fabrics undergo are that the fabric passes over two pre-heated rollers, one of which is an engraved printing roller having fine dots engraved on it in which HDPE powder or other suitable polymer is filled through a hopper and this powder gets printed onto the fabric. This dot printed cloth then passes through a heated chamber whereby the printed powder gets fixed and the impregnation of the plastic is visible to the naked eye. The applicant claims that as the fabric is printed with HDPE powder on one side, they are partially coated with plastics. 'Coated Fabrics' is not defined either in the HSN or in the Customs Tariff made applicable to GST. The definition as available in the book, Encyclopedia of Textiles, 'Coated Fabrics' is defined as "any fabric which is coated, filled, impregnated or laminated with a continuous film forming polymeric Composition". In the present case, the HDPE Powder is impregnated on the fabric by the way of spattering of the Powdered HDPE on one side of....
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....the State Jurisdictional authority has also opined that when Chapter Note 2(c) itself is no longer in existence, and the FUSIBLE INTERLINING FABRICS OF COTTON (FIFC) otherwise did not satisfy the requirements laid down in Chapter Note 2(a). 9.2 We find that Note 2(c) - "Textile fabrics, partially or discretely coated with plastic by dot printing process (Heading No. 59.03)" was inserted in the Chapter Notes to Chapter 59 of the Central excise Tariff w.e.f 01.03.1989, this note was modified w.e.f 20.03.1990 by omitting the words, by dot printing process' and thereafter the entire Note 2( c) was deleted effective from 16.03.1995. CBEC had issued Circular No 433/66/98-CX dated 27.11.1998 clarifying that,- 3. In the 1995 budget, the Central Excise Tariff was broadly aligned with the Customs Tariff (based on HSN) and as such Chapter Note 2(c) of Chapter 59 of the Central Excise Tariff was omitted. The omission of Chapter Note 2(c) was neither intended to and nor resulted in changing the classification of Fusible Interlining Cloth under Heading 5903 of the Central Excise Tariff. This is so because as per the HSN Explanatory Notes, textile fabrics winch are spattered by spraying wi....