TaxTMI 
TaxTMI 
2022 (1) TMI 745
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....ereinafter called the 'Applicant5) 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 ....
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....pters 50 to 55, 58 or 60 of the GST Tariff, depending 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 eithe....
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....ourt of Madras in Madura Coats vs CBE&C, New Delhi [2004 (163) ELT 164 (Mad.)} wherein, the said circular was held to be illegal and ultra-vires and liable to be quashed. 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 t....
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....under Chapter 52 for FIFC for Central Excise, the same classification will apply under GST regime as well. They have stated that the fusible interlining fabrics supplied by them includes the product 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....
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....ic, where the textile fabric is present merely for reinforcing purposes? No (sample is not a plate, sheet or strip of cellular plastic. The samples are made 100% cotton fabrics and are coated on one side of the fabrics only) • Copy of AAR order of Uttarakhand 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 man....
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....3 materials which were in parcel, as given below: Sl.No Particulars HSN HSN Description GST Rate 1 Talco 590390 Textile fabrics impregnated coated covered or laminated with plastics other than those of heading 5902 other: of cotton 12% 2 Mcl 520929 Woven fabrics of 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, whe....
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.... Relevant chapter (not 5903) 2 In Re Sadguru Seva Paridhan AAR. West Bernal 5903 3 In Re; The Ruby Mills Ltd AAR. Uttarakhand 5903 4 In Re. Sadguru Seva Paridhan Appellate AAR, West Bengal 5903 5 In Re: Ashima Dyecot Pvt Ltd. AAR, Gujarat 5903 6 ln Re: Supercoat India AAR. Gujarat 5903 7 in Re: Jay Ambey AAR. Gujarat 5903 5.1 The State Jurisdictional officer 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. Furth....
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....fabrics which are partially coated or partially covered with plastics and bearing designs resulting from these treatments are excluded from classification under HSN Code 5903. As a sequitur, it must be classified under Chapter 52 depending upon the weightage of cotton in the fabrics and not under the FISN Code 5903. It was submitted by the applicant that the Fusible Interlining Fabrics supplied by them includes the product manufactured by Madura Coats Private 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 c....
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....tile products of heading 5811 The applicant in Para No.9 of the application had stated that the coating pattern on FIFC could be seen with a naked eye. The fabrics FIFC fulfils the description of the Note 2(a)(1) to Chapter 59, thus the classification would fall under Heading 59.03 only. Hence, it is felt that there are no merits in the case for classifying FIFC under Chapter 52 and the request of the applicant may please be rejected. 6. We have carefully examined the facts & contentions filed along with the 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....
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....ontaining 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% 7.2 The contention of the applicant is that,- • In the Pre-GST regime, under Central Excise Tariff, with the inclusion and subsequent removal of Chapter Note 2(c) of Chapter 59, CESTAT Chennai in the case of Madura Coats Private Limited, has held that 'fusible interlining cloth' will not get classified under 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 ....
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....; (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 material, provided that such coating or covering can be seen with the naked eye with no account being taken of any resulting change of colour (Chapter 39); (4) fabrics partially coated or partially covered with plastics and bearing designs resulting from these treatments (usually Chapters 50 to 55, 58 or 60); (5) plates, sheets or strip of cellular plastics, 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 ....
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....textile fabrics which are spattered by spraying with visible particles of thermoplastic material and are capable of providing a bond to other fabrics or materials on the application of heat and pressure. From the above, it is evident that • CTH 5903 covers textile fabrics impregnated, coated, covered or laminated with plastics irrespective of the weight per square metre and the nature of plastic material. • conditions at (1) and (4) of the Chapter Note 2 (a) are relevant to the case at hand • Those textile fabrics in which the impregnation, coating or covering cannot be seen with the naked eye will usually fall in Chapters 50 to 55, 58 or 60 and for these purposes, no account is to be taken of any resultant change in colour • Those textile fabrics partially coated or partially covered 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 ....
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....fabrics or materials on the application of heat and pressure are covered under CTH 5903. The applicant during the personal hearing held on 11.02.2020 has stated that their product provides a stiffness; when the garment manufacturers use this, they pass through rollers which fuses to any other cloth placed beneath, i.e., these are capable of providing a bond to other fabric on the application of heat and pressure, which as per the explanatory notes is squarely covered under CTH 5903. Therefore, we do not have any hesitation to hold that the products in hand merits classification under CTH 5903 only. 9.1 Having decided that the products merit classification only under CTH 5903 based on the findings at Para 8 above, we analyse the submissions of the applicant to substantiate classification under Chapter 52 and not under CTH 5903 considering that 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 ....
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....t the Central Excise Tariff was aligned with the Customs Tariff only in the 1995 Budget after which Note 2(c) which existed in the Chapter Note of Chapter 59 was omitted, the implications of which stands clarified in the CBEC Circular No.433/66/98-CX dated 27.11.1998. This Circular has been established in Para 9.2 above, as remaining valid. Further, it is pertinent to note that the Tariff Description and Chapter notes guided by the Explanatory Notes to HSN will have primacy for the purpose of classification over Circulars issued by CBEC. Explanatory Notes to HSN under CTH 5903 (mentioned above) covers 'textile fabrics which are spattered by spraying with visible particles of thermoplastic material and are capable of providing a bond to other fabrics or materials on the application of heat and pressure', which is the case of products at hand. 9.4 It is also pertinent to note that the Various Advance Ruling Authorities -AAAR, west Bengal in the case of M/s. Sadguru Seva Paridhan; AAR, Uttarakhand in the case of M/s. The Ruby Mills Ltd(one of the suppliers to the applicant); AAR Gujarat in the case of M/s. Ashima Dyecot Pvt Ltd, M/s. Supercoat. India and M/s. Jay Ambey has ....