TaxTMI 
TaxTMI 
2023 (6) TMI 421
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.... (i) Goods are coated and that coating is visible with naked eye. (ii) Goods are coated with water repellant/waterproof substances as well as ultra violet proof substances. (iii) Goods are to be used in manufacturing umbrella. (iv) Goods are not "Woven Non' Texturised Polyester Lining Fabric" as declared in the B/E. Based on this test report, the Department alleged that the Respondent has mis-declared their goods and wrongly classified them under the CTH 5903. 3. A Show Cause Notice was issued proposing to classify the above goods as 'Non-Texturised Polyster Lining Fabric' under the Chapter Heading 54071094 with specific Basic Customs Duty of Rs.115 per Kg. The Show Cause Notice demanded differential duty of Rs.3,69,17,393.00/- under Section 28(4) of Customs Act, 1962. The Notice also proposed penalties under Sections 112(a), 112(1), 114A and 114AA of Customs Act, 1962. 4. The importer filed a Writ Petition at Kolkata High Court, seeking orders to send the samples of the fabric for retest by the Textile Committee (RLTC) or Customs Research Laboratory (CRCL), Delhi or any other authorized laboratory. The Hon'ble High Court of Calcutta dispo....
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....dian Aluminium Cables vs UOI where the court has held that end use of a product cannot necessarily be the determining factor for classification of the goods. Accordingly, he passed the following order:- "I find that the allegations in the Show Cause Notice NO.S2- 04/2015 SIB bearing File No.S121-20/2014 SIB dated 19.03.2015 against the importer M/s Umbar Marketing Pvt. Ltd. and Customs House Agents/Customs Brokers M/s Pagoda Shipping Corporation, M/s Perfect Logicare Pvt. Ltd. as not sustainable. Hence, I drop the charges." 9. Aggrieved against the order passed by Commissioner, the Revenue is in Appeal before us. In their Grounds of Appeal, the Revenue has made the following submissions:- (i) In the impugned Order, the Commissioner classified the fabrics under CTH 5903 on the ground that they were found to be woven fabrics, coated and the coating can be seen with naked eye without taking into consideration of any colour change. Accordingly, he concluded that the fabric fulfilled the criteria as mentioned in Chapter Note 2 (a) of Chapter 5903 and also they do not fall under the exception clause (1) to (6) in general. (ii) The impugned goods imported by ....
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....e Principal condition for the goods to be classified under Heading 5903 is that the goods have to be impregnated, coated, covered or laminated with plastics. The test report of IIT, Delhi mentions that four of the samples (other than Sample E) were coated with "Aluminium Paste". The test report of RLTC states that the Silver colour coating is applied on basic fabric as visible to naked eyes. However, it cannot be ascertained that this type coating is used for waterproofing or anti UV purpose. These qualities of the impugned goods are not in dispute. Consequently, the impugned goods cannot be classified under Heading 5903. It is established from the test reports that the impugned goods do not fulfill this condition of 'Coating with Plastics' for bringing it within the purview of Chapter Note 2 (a) (1) of Chapter Heading 5903. Hence, the Department contended that the Commissioner has erred in ignoring this primary condition and erroneously classified the impugned goods under the Heading 5903. 11. In the Grounds of Appeal, the Revenue also contended that the Commissioner has ignored the ultimate use of these fabrics. In trade circles, it is common knowledge that these goods a....
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....ading 5903. 16. We find merit in the argument of the Department. Chapter Note 2(a) of Heading 5903 applies to textile fabrics, impregnated, coated, covered or laminated with plastics. According to the Principle of Ejusdem generis, when a general word follows some specified words, then the general words will have the same meaning as that of the specified words. By applying this Principle of ejusm genris, the interpretion of the above Chapter Note is that the textile fabrics impregnated with plastic, coated with plastic, covered with plastic and laminated with plastic are covered under the Chapter Heading 5903. Coating with plastic is the primary requirement for classification of any fabric under the chapter heading 5903. Visibility to naked eye is also a relevant condition, but, that will come only after satisfaction of the primary condition of covering with plastics. 17. We also agree with the argument of the Learned Counsel for the Respondent that Chapter 59 covers coated fabric, where the coating is visible to naked eye other than the change in colour. 18. The Department has sought the classification of the impugned goods under the Chapter Heading 5407. The Department's ....
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....apters 50 to 55. 20. We observe that the Department proposed to classify the goods under the CTH 5407 only on the basis of end use. End use of a product cannot be a criteria for classification. However, as held by the Hon'ble Supreme court in the case of Indian Aluminium Cables vs UOI, end use alone cannot determine the classification. The other parameters such as the nature of cloth, nature of coating etc are required to be ascertained to classify the fabrics. Further when the fabrics are coated and the coating is visible to naked eye, the fabrics are classifiable only under Chapter 59 of the Customs Tariff Act. Thus, we observe that coated fabrics visible to naked eye would fall under Chapter 59 only. But, the specific sub heading under which it is to be classified will depend on the nature of the material coated. 21. During the course of the hearing, the Respondents made a written submission wherein they stated that if the said goods are not falling under CTH 5903, then the goods would fall under CTH 5907 of the Customs Tariff, where the rate of duty is same as that of 5903. We find that the Hon'ble Supreme Court in the case of Warner Hindustan Ltd. v. Collector of Central....