In re Girish Rathod (GST AAAR Gujarat)
We find that CBEC Circular No. 433/66/98-CX-6 dated 27/11/1998 is relevant even today and has got persuasive value as on date. Further, Chapter Note 2(a)(4) to Chapter 59 says that fabrics partially coated or partially covered with plastics and bearing designs resulting from these treatments are excluded from Heading 5903 and are usually covered in Chapter 50 to 55, 58 or 60, depending on the materials used. At the same time, according to the Explanatory notes to the HSN of Heading 5903 (detailed in para 11.1 above), 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 classifiable under heading 5903. Also, the process of manufacture of the fusible interlining of fabrics of cotton as submitted by the appellant appears to be similar to the one mentioned hereinabove. Further, according toCircular No. 433/66/98-CX-6 dated 27/11/1998, such classification should be treated as an exception to Chapter Note 2(a)(4) to Chapter 59. Even otherwise, the test results of the fabric ‘fusible interlining fabric of cotton’ of the appellant as compared to the exclusion clauses(1) to (5) of Chapter 2(a) has been discussed in detail in para-11.5 above which proves that the appellant’s fabric satisfies all the conditions/criteria for being classified under Heading 5903. However, there appears to be an anomaly here (with regard to Chapter Note2(a)(4) of Chapter 59) because the appellant in his submission (along with appeal) has stated that their fabric is having partial and porous coating with polyethylene powder which contradicts the test report of ATIRA which states that their fabric is not partially coated or partially covered but is covered with plastic polymer on one side. Assuming that the fabric of the appellant is partially coated or partially covered with plastic polymer as submitted by them, it would not fulfill the exclusion clause of Chapter Note 2(a)(4) of Chapter 59 and would therefore not fall under the Heading 5903 for falling under the exclusion clause of Chapter Note 2(a)(4) of Chapter 59 under these circumstances. However, since, according to Circular No. 433/66/98-CX-6 dated 27/11/1998, such classification should be treated as an exception to Chapter Note 2(a)(4) to Chapter 59, the fabric of the appellant would be covered under Heading 5903 only in view of the provisions of the said circular.
Further, it is also seen that the appellant has, nowhere in their grounds of appeal or in their written or oral submissions, taken the view that Circular No. 433/66/98-CX-6 dated 27/11/1998 has erred in treating fusible interlining cloth as a category of textile fabric that is spattered by spraying with visible particles of thermoplastic material and is capable of providing a bond to other fabrics or materials on the application of heat and pressure. In the absence of any such submission, it is reasonable to agree with the views expressed by CBEC in Circular No. 433/66/98-CX-6 dated 27/11/1998 that fusible interlining cloth is classifiable under Heading 5903. We, therefore, find that irrespective of the fact as to whether the fabric of the appellant fulfills the criteria for classification under Heading 5903 or otherwise as per exclusion clauses (1) to (5) of Chapter Note 2(a) of Chapter 59, it would still be classified under Heading 5903 only, on account of the Explanatory notes to the HSN, which states that ‘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 classifiable under heading 5903’ read with the grounds mentioned in Circular No. 433/66/98-CX-6 dated 27/11/1998. In view of the above, we find that the product ‘fusible interlining fabric of cotton’ of the appellant would undoubtedly be classifiable under Heading 5903 of the Customs Tariff Act, 1975 only.
In view of foregoing, we confirm the Advance Ruling No. GUJ/GAAR/R/86/2020 dated 17.09.2020 to the extent it has been appealed before us and hold that The product Fusible Interlining Fabrics of Cotton of the appellant M/s Girish Rathod (Jay Ambey), Ahmedabad is correctly classifiable under Heading 5903 of Chapter 59 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975).
FULL TEXT OF ORDER OF APPELLATE AUTHORITY OF ADVANCE RULING, GUJARAT
The appellant M/s. Girish Rathod (Jay Ambey), Opp. Shri Govind Processors, 183-1, Bhagirath Process, Shahwadi, Ranipur, Narol, Ahmedabad-382405 (hereinafter referred to as the appellant) is engaged in the manufacture of various textile materials including Fusible Interlining fabrics of cotton, which is generally used in the market by tailor for stitching purpose and for preparing finished articles of clothing.
2. The appellant has submitted the manufacturing process of Fusible interlining Fabrics of cotton as under:
“100% cotton grey fabrics having construction count of 20”s with read and peak 60×60 (open end yearn of 1400CSP) is subjected to process such as desizing, boiling, mercerizing, bleaching and washing by adding chemicals (desizing agent, caustic flex, caustic lye liquid soap, hydrogen peroxide) with acetic acid with the help of Jigger Machine. Thereafter it is subjected to drying range machine for drying. Subsequent to this dried fabric is by adding starch PVA and binder by padding process on Stenter Machine. After completion of this process this fabric is passed through calendar and zero machine. Thereafter this fabric is partially coated by Polyethylene powder having 25 to 45 grams per sq.meters with the help of engraved dotted cylinder. Thus Final Fabrics produced is having partial and porous coating with Polyethylene powder. The fabric so emerged is known as Fusible Interlining fabrics of cotton. Thus from the manufacturing process it is revealed that coating is not carried out with Films.”
3.The appellant has submitted that air and water can easily pass through this fabric and this fabric is easily tearable and washable by hand; that in common parlance the fabric so manufactured is known as Fusible Cotton interlining fabrics and it is supplied to wholesaler, wholesaler to retailer and retailer to tailor for it is used in the collars and cuff of shirt for garments and it’s price is below Rs.100 per sq.metre; that prior to roll out of Goods and Service Tax, the dispute related to classification of the said goods has undergone long litigation; that as of now the said fabrics is classifiable under Chapter 52 of the Central Excise Tariff Act, 1985 as per the decision in the case of Madura Coats pvt.ltd. vs. Commissioner of Central Excise, Tirunvelveli reported as 2019(365)ELT345(Tri-Chennai) wherein the Hon’ble Tribunal has held that Note 2 (c) in Chapter 59 of Central Excise Tariff itself is no longer in existence and requirements laid down in Chapter Note 2(a) to Heading 5903 read with CBE & C Circulars are not satisfied and hence Fusible interlining cloth not to be classified under Heading 59.03. Impugned order cannot sustain and is liable to be set aside. The appellant has further submitted that the aforementioned decision though pertains to the pre-GST regime and pertains to Central Excise Tariff, has got relevance for classification in the case of appellant in the GST regime as well because of the facts and circumstances are identical to the case of Madura Coats pvt.ltd.referred above and relied by them.
4. The appellant has submitted that for interpretation of the tariff items in GST as per explanation (iii) and (iv) of the Notification No.1/2017-Central Tax (Rate), the First Schedule of the Customs Tariff Act, 1975, along with section and chapter notes and the general explanatory notes of the First Schedule are to be referred; that on rollout of GST and prior to the decision in the case of Madura Coats pvt.ltd. vs. Commissioner of Central Excise, Tirunvelveli discussed in the above para, they classified their product under Chapter Heading 5903 as per Sr.No.160 of Notification No.1/2017-Central Tax (Rate) and Integrated Tax Rate; that in view of the above decision, the controversy arose whether their product was classifiable under Chapter 52 or 59. The appellant has stated that the comparison of Heading 5903 in the Central Excise Tariff Act, 1985 and the Customs Tariff Act, 1975 are the same and read as:
“Textile Fabrics, impregnated, coated, covered or laminated with plastics, other than those of Heading 5902.”
5. The appellant has submitted that Chapter Note for Heading 5903 of both the First Schedule to the Central Excise Tariff Act, 1985 and the First Schedule to the Customs Tariff Act, 1975 are similar and as under:
