TaxTMI 
TaxTMI 
2025 (11) TMI 756
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....the said layer, however, does not create an unbroken, uninterrupted or comprehensive plastic layer but only partially covers the fabrics with pulverised 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 interrupted. 3. In the earlier round before this Authority, the applicant had submitted that 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 by virtue of amendment made to the Central Excise Tariff vide Finance Act, 1989, Note 2(c) came to be introduced in Chapter 59 of the Tariff, which read as under: "Textile Fabrics, partially or discretely coated with plastic by dot printing process (Heading No. 59.03)" However, prior to the introduction of this Note, CBIC had vide Circular dtd. 02.09.1988 also clarified that for the Fusible Interlining Fabrics, 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....
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.... the said notification. 6. This Authority after relying upon the order dtd. 19.03.2020 of the Appellate Authority for Advance Ruling in the case of Re: M/s Sadguru Seva Pradhan (P) Ltd [2020 (38) G.S.T.L. 499 (App. A.A.R .- GST-W.B)] found that CBEC Circular No. 433/66/98-CX-6 dtd. 27.11.1998 is relevant even today and has persuasive value. As per the said Circular, in the HSN Explanatory Notes, 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 are covered under Chapter Heading 59.03. The process of manufacture of the fusible interlining cloth, as submitted by the applicant appears to be similar to the one mentioned in the HSN. This Authority further compared the three conditions envisaged in the explanatory notes to the HSN (i.e. (i) the impregnation, coating or covering can be seen with the naked eye (ii) The products are not rigid (iii) the textile fabric is not completely embedded in, nor coated on both sides with plastics) with the test reports of the products issued by ATIRA and came to the conclusion that the said product....
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....cision relied upon by the petitioner by distinguishing its results relied upon by the advance ruling authority in case of M/s. Goodswear Fashion Ltd. wherein, in similar facts, Advance Ruling Authority of Uttarakhand holding that the specimen fabric i.e. Polyester Viscose Fusing Interlining Woven Fabric partially covered with plastic 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 fall under Chapters 502, 55, 58 or 60 as per Chapter Note 2(a)(4) of the Chapter 59 of the GST Tariff. Therefore, ongoing through the Chapter Note 2(a)(4) of the Chapter Heading 5903 and as per the test report of Atira the specimen fabric i.e. Polyester plus cotton interlining woven fabrics being partially covered with plastic and bearing design resulting from this treatment which leads to the plastic coated pattern which is visible on one side of the fabric will fall under Chapters 502, 55 58 or 60 as per Chapter Note 2(a)(4) of the relevant Chapter 59 of the GST Tariff and not under Chapter 59 Heading 5903 as held by the impugned orders. 13. In view of the....
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....he product under consideration is partially coated fabric and air, and water can pass through the same. Hence the same is not classifiable under Chapter 5903 as per Chapter Note and is required to be classified under Chapter 52 to 55, as per the characteristic of the cloth. (c) The issue pertaining to the classification of fusible interlining cloth has been decided by the Tribunal in the case of Madura Coats (P) Ltd. classifying the fabric under Chapter 52. The fabric manufactured by the present applicant is identically the same. The applicant has obtained the test report of the fabric from M/s ATIRA, which has been submitted. Therefore, the order of the Tribunal in the case of Madura Coats is directly applicable for the classification of goods manufactured by the present applicant. (d) The test report of ATIRA is crystal clear that the coating on the cloth cannot be seen with naked eye. Further, the coating is non-continuous and is different from film coating. It is applied only on one side and bears a design like dot metric resulting from coating process. The test report specifically says in Point No. 7 that the fabric is porous and pervious. Hence, as per the r....
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....ning Fabrics of Cotton' will not fall under Chapter 5903. The reasoning given by the High Court is that it is clear from the test report of ATIRA, that the fabric manufactured by the applicant was partially coated and once the fabric is partially coated, the same would fall under Chapter 52 to 55 as per the exclusion clause as mentioned in Chapter Note 2(a) of Chapter 59. The High Court also held that once the Madras High Court has set aside the Circular dtd. 27.11.1998, such decision is binding upon the Authority, instead of distinguishing the same on the ground that fusible interlining fabric of cotton are classifiable under Heading 5903 and not under Heading 52 to 55 contrary to the test reports on record. The High Court has, therefore, remanded the matter to this Authority to decide the matter afresh. 15. We find from the order of the High Court, that the issue that 'Fusible Interlining Fabrics of Cotton' will not fall under Chapter 5903, has already been settled by the High Court. The only issue that remains to be decided by us is as to under which of the Chapters 50 to 55, 58 or 60, the product will fall. We find that the applicant has submitted two test report of ATRIA - ....
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.... round of litigation before the Tribunal, the appellant had made a plea that Circular No. 5/89, dated 15-6-1989 should be applied in their case even for the period after 16-3-1995. On a perusal of the circular, we find that in para-4 therein it is clarified that prior to introduction of Chapter Note 2(c), from 1-3-1989, "Fusible Interlining Cloth" made by discrete coating with plastic get covered under chapters 52-55 depending on the textile materials whether cotton or man-made fabrics etc. The Tribunal in their Final Order dated 16-9-1998 had acceded to this plea and had given specific direction in the remand order that the said circular should be taken into account while deciding the matter. (Emphasis Supplied). 18. Circular No. 5/89 dtd. 15.06.1989, relied upon by the Tribunal for classification of the product prior to the introduction of Chapter Note 2(c), is also reproduced below: - Circular No. 5/89, dated 15-6-1989 Government of India Ministry of Finance (Department of Revenue) New Delhi Central Excise - Coated Fabrics - Classification of 'FUSIBLE INTER-LINING CLOTH' whether classifiable as coated fabrics under heading 59.03 of C.E.T. or under Chapter....
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....n XI to the GST Tariff. The said section comprises of Chapters 50 to 63. We are only concerned with Chapters 50 to 60. The products which fall under these Chapters are as under: - Chapter No. Description 50 Silk 51 Wool, fine or coarse animal hair, horsehair yarn and woven fabric 52 Cotton 53 Other Vegetable textile fabrics; paper yarn and woven fabrics of paper yarn 54 Man-made filaments; strip and the like of man-made textile materials 55 Man-made staple fibres 56 Wadding, felt and non-wovens; special yarn; cordage, ropes and cables and articles thereof 57 Carpets and other textile floor coverings 58 Special woven fabrics; tufted textile fabrics; lace; tapestries; trimmings' embroidery 59 Impregnated, coated, covered or laminated textile fabrics; textile articles of a kind used for industrial use 60 Knitted or crocheted fabrics As per the test report of ATIRA, the Fusible Interlining Fabric of the applicant comprises of 85% or more of cotton. Cotton fabrics fall under Chapter 52 of the Tariff. Therefore, the appropriate heading under which Fusible Interlining Fabric of Cotton would fall is Chapter 52. 2....