In re Girish Pravinchandra Rathod (Jay Ambe) (GST AAR Gujarat)
The applicant, M/s Girish Pravinchandra Rathod (Jay Ambe), registered under GST, manufactures various textile articles, including Fusible Interlining Fabrics of Cotton. The fabric is used by tailors in garment stitching and is made by coating one side of cotton fabric with pulverised plastic powder using a dot matrix printing process. This coating creates a partial plastic layer and not a continuous or impervious one.
Earlier, such fabrics were classified under Chapters 50 to 55 of the Central Excise Tariff, depending on the fabric type. However, an amendment through the Finance Act, 1989, introduced Note 2(c) in Chapter 59, bringing “textile fabrics partially or discretely coated with plastic by dot printing process” under Heading 5903. A CBIC Circular (02.09.1988) initially required a continuous plastic layer for such classification, but a telex (30.09.1988) removed this requirement. Later, Circular No. 5/89 (15.06.1989) clarified that fusible interlining cloth made by discrete plastic coating would be classified under Chapter 59. Before this amendment, the classification was based on the nature of the base fabric.
On 16.03.1995, Note 2(c) was deleted from Chapter 59, causing confusion regarding the classification of fusible interlining fabrics. The Board later issued Circular No. 433/66/98-CX-6 (27.11.1998), stating that despite deletion, the classification under Heading 5903 would continue. This Circular was challenged in Madura Coats v. Union of India before the Madras High Court, which held the Circular invalid as it overrode the quasi-judicial powers of assessing authorities. After subsequent adjudication, the CESTAT Chennai (2018) ruled that such fabrics could not be classified under Chapter 59 following the deletion of Note 2(c).
