Tribunal held classification of Non Textured Fabrics must be based on nature and material coated

Commissioner of Customs (Port) Vs Umbar Marketing Private Limited (CESTAT Kolkata)

Conclusion: Classification of non-textured fabrics must be based on nature and material coated as end use of a product could not be a criteria for classification, the other parameters such as the nature of cloth, nature of coating etc were required to be ascertained to classify the fabrics.

Held: Assessee had imported Non-Texturised Polyester Lining Fabric and filed the Bill of Entry No 4760255 dated 27/02/2014, by classifying the same under the Chapter Heading No.5903. The Department contended that the Principal condition for the goods to be classified under Heading 5903 was that the goods have to be impregnated, coated, covered or laminated with plastics. The test report of IIT, Delhi mentioned that four of the samples (other than Sample E) were coated with “Aluminium Paste”. The test report of RLTC stated that the “-Silver colour coating was applied on basic fabric as visible to naked eyes. However, it could not be ascertained that this type coating was used for waterproofing or anti UV purpose. These qualities of the impugned goods were not in dispute. Consequently, the impugned goods could not be classified under Heading 5903. It was established from the test reports that the impugned goods did 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 had erred in ignoring this primary condition and erroneously classified the impugned goods under the Heading 5903. Revenue also contended that the Commissioner had ignored the ultimate use of these fabrics. In trade circles, it was common knowledge that these goods were used for manufacturing of “Umbrella Cloth Panel”, which also gets corroborated by the statement of the CHA/CB and therefore the goods should be treated as such. Department filed the present Appeal with a request to set aside the Order-in-Original passed by the Commissioner and classified the goods under CTH54071094 chargeable to specific rate of Customs duty of 115 Per kg. It was held that the Department proposed to classify the goods under the CTH 5407 only on the basis of end use. End use of a product could not 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 could not determine the classification. The other parameters such as the nature of cloth, nature of coating etc were required to be ascertained to classify the fabrics. Further when the fabrics are coated and the coating was visible to naked eye, the fabrics were classifiable only under Chapter 59 of the Customs Tarriff Act. Thus, coated fabrics visible to naked eye would fall under Chapter 59 only. But, the specific sub heading under which it was to be classified will depend on the nature of the material coated. Therefore, the goods were not classifiable under CTH 54071094 as proposed by the Appellant. Accordingly, the Appeal filed by the Appellant (Department) was rejected.

FULL TEXT OF THE CESTAT KOLKATA ORDER

The facts of the case in brief are that the Respondent has imported Non-Texturised Polyster Lining Fabric and filed the Bill of Entry No 4760255 dated 27/02/2014, by classifying the same under the Chapter Heading No.5903. The SIB wing of Customs, Kolkata intercepted the impugned goods filed under the above said Bill of Entry and on examination found that the imported goods were ‘Umbrella Panel Fabrics’ classifiable under Chapter Heading 5407. Accordingly, the goods were seized and later provisionally released on execution of bond and Bank Guarantee.

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