In re NZ Seasonal Wear Private Limited (CAAR Mumbai)
Introduction: In a recent development, NZ Seasonal Wear Private Limited sought an advance ruling from the Customs Authority for Advance Rulings, Mumbai (CAAR) regarding the classification of PVC raincoats under the Customs Tariff Act. This article delves into the details of the case, examining the manufacturing process and the applicable tariff code.
Detailed Analysis:
Background: NZ Seasonal Wear Private Limited, engaged in the manufacturing and sale of seasonal wear products, filed an application for an advance ruling on the classification of PVC raincoats for export through the port of Nhava Sheva.
Manufacturing Process: The PVC raincoats undergo a meticulous manufacturing process, involving PVC sheet rolls, panel cutting, printing, heat sealing, zipper stitching, and packing. The non-woven nature of the product is emphasized, with PVC seams being “welded” or bonded without traditional stitching.
Legal Interpretation: The applicant argues that PVC raincoats fall under Chapter 62 of the Customs Tariff Act, specifically under HSN code 6201, as it covers articles of apparel and clothing accessories, not knitted and crocheted. The interpretation is based on Section Note 14 to Section XI, emphasizing the classification of textile garments under their respective headings.
Definition of Textile Material: While the Customs Tariff Act lacks a definition for “textile” or “textile material,” references to industry publications are made. The applicant refers to the “Encyclopedia of Textiles, Fibers and Nonwoven Fabrics” and the “Textile Terms and Definitions, Tenth Edition” to establish the understanding of textile materials.
Supreme Court Precedent: The applicant cites the Supreme Court judgment in Porritts & Spencer (Asia) Ltd., highlighting the evolution of the term “textiles” to include a broad range of materials beyond traditional woven fabrics. The judgment recognizes plastic as a textile material, supporting the applicant’s position.
Explanatory Notes and Specificity: The analysis emphasizes the HSN Explanatory Notes, specifically those for Chapter 62.01, which covers raincoats. The principle of specificity in classification is invoked, asserting that specific headings prevail over general ones.
Conclusion: After considering the arguments presented, the Customs Authority for Advance Rulings, Mumbai, ruled that PVC raincoats merit classification under CTI-6201, specifically under CTI 6201 4010 of the Customs Tariff Act. The decision reinforces the importance of specificity in classification and aligns with the applicant’s interpretation of the relevant legal provisions.
FULL TEXT OF THE ORDER OF CUSTOMS AUTHORITY OF ADVANCE RULING, MUMBAI
M/s. NZ Seasonal Wear Private Limited (having IEC No 0309045983 and hereinafter referred to as ‘the applicant’, in short) filed an application (CAAR-1) for advance ruling before the Customs Authority for Advance Rulings, Mumbai (CAAR in short). The said application was received in the secretariat of the CAAR, Mumbai on 10.04.2023 along with its enclosures in terms of Section 281-1(1) of the Customs Act, 1962 (hereinafter referred to as the ‘Act’ also). The applicant is seeking advance ruling on the classification of ‘PVC raincoats’ for exports through the port of Nhava Sheva.
2. Applicant has stated as follows in the statement of relevant facts having a bearing on the question(s) on which advance ruling is required:
2.1. That the Applicant is, inter alia, engaged in the business of manufacturing and sale of
seasonal wear products (i.e. rainwear and winter wear). The Applicant is manufacturing and distributing Coated Fabric Raincoats and PVC Raincoats. Now the Applicant wants to export PVC raincoats. A PVC raincoat is a waterproof outer jacket made from polyvinyl chloride (PVC). The slick, non-permeable surface of PVC makes it a popular material for raincoats. The product, is inter alia, made from huge PVC rolls/sheets. The said PVC rolls undergoes panel cutting process (i.e. the huge rolls/ sheets are cut into smaller sheets for front & back portion, sleeves, pockets, etc.). The said small PVC sheets are generally not stitched with a needle and thread. Since PVC is nonporous, a needle would leave a large hole that would allow water to enter, making for a very ineffective raincoat, and weakening the seam. Instead, PVC seams are generally “welded” with heat, or bonded by chemical means. Either way, the all pieces of materials are melt together, either thermally or chemically, and are permanently bound. Thus, it is a non-woven product. Once all the material are permanently bounded the stitching of front zipper (made from polyester tape/ plastic teeth), draw cord (made from polyester), button (made from plastic or metal) or stopper (made from plastic) is carried out. The finished product is then sent to the packing machine for packing and the final product is ready to be transferred to the warehouse for dispatching the same to various distributors, retailers, wholesaler, etc.
2.2. The PVC raincoats are made from PVC Sheets and Trims: Zipper, Draw Cord, Button & Stopper. The flow of process involved in the manufacturing of the PVC raincoats is as follows: PVC Sheet rolls & Trims–> Panel Cutting Process (front, back, sleeves and pockets etc.)—>Printing—>Heat Sealing (Welding)–>Front Zipper Stitching–‘Packing (Individual Polybag & Master Carton)–Transfer to Warehouse and dispatch.
2.3. The Applicant wants to export the PVC raincoats. As per the understanding of the Applicant the said product will be classified under chapter 62 of Customs Tariff Act (HSN code 6201) as the same specifically provides an tariff item for raincoats. Section XI of Customs Tariff Act covers Textiles and textile articles. Chapter 62 covers articles of apparel and clothing accessories, not knitted and crocheted. Chapter heading 6201 of chapter 62 which is germane, is reproduced thus:
