In re Mahaveer Shantilal Bafna (Proprietor M/s. Ram Traders) (GST AAR Tamilnadu)
Whether Fusible Interlining Fabrics of Cotton (FIFC) fall for classification under HSN Code 5903 or under Chapter 52 (heading depending upon weightage of cotton in the fabrics)
AAR hold that the Fusible Interlining Fabrics of Cotton (FIFC) fall under CTH 5903 for the reasons that they are not covered under the exclusions stated at Chapter Note 2(a) of Chapter 59 of the Customs Tariff made applicable to GST. The Fusible Interlining Fabrics of Cotton (FIFC) is classifiable under CTH 5903 of the Customs Tariff.
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, TAMILNADU
Note: Any appeal against the Advance Ruling order shall be filed before the Tamil Nadu State Appellate Authority for Advance Ruling, Chennai under Sub-section (1) of Section 100 of CGST ACT/TNGST Act 2017 within 30 days from the date on which the ruling sought to be appealed against is communicated.
At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Service Tax Act would also mean a reference to the same provisions under the Tamil Nadu Goods and Service Tax Act.
MAHAVEER SHANTILAL BAFNA (Proprietor M/s RAM TRADERS), VARDHAMAN COMPLEX, 890 B-D RAJA STREET, COIMBATORE-641001 (hereinafter called the ‘Applicant5) is registered under the GST Vide GSTIN 33ACSPB3904E1Z0. The applicant is engaged in the business of buying and selling fabrics, including micro-dot fusible interlining manufactured by various manufacturers. The applicant has sought advance ruling on the following question.-
Whether Fusible Interlining Fabrics of Cotton(FIFC) fall for classification under HSN Code 5903 or under Chapter 52(heading depending upon weightage of cotton in the fabrics)
The Applicant has submitted the copy of application in Form GST ARA – 01 and also submitted a copy of Challan evidencing payment of application fees of Rs.5,000/- each under sub-rule (1) of Rule 104 of CGST rules 2017 and SGST Rules 2017.
2.1 The applicant has stated that they are engaged in the business of buying and selling fabrics, including micro-dot fusible interlining manufactured by various manufacturers such as Madura Coats Limited, The Ruby Mills Limited etc., They have stated that Interlining is a layer of fabric inserted between the shell fabric and the lining of a garment to give a suitable appearance and stability. FIFC are 100% cotton fabrics which have been subjected to a “powder dot coating process”. Under this process, the cotton fabric passes over two pre-heated rollers having a surface temperature of above 225°C, one of which is an engraved printing roller having fine dots engraved on it in which high density polyethylene (HDPE) powder is filled (through a hopper), and this powder gets printed onto the fabric. The excess powder is scraped away by a doctor blade provided in the hopper as in the case of roller printing. The dot printed cloth then passes through a heated chamber whereby the printed powder gets fixed. The said partial / discrete coating of fabric is carried out only on one side of the fabric. This coating pattern can be seen with the naked eye. They have stated that FIFC enhance the appearance of finished garment by influencing the following characteristics-handle and bulk, shape retention, shrinkage control, crease recovery, appearance after washing or dry cleaning and durability. FIFC is mainly used in the collars, cuffs, etc part of the garments.
2.2 The Applicant has also stated that the classification of FIFC has been the subject matter of several clarifications, litigations, and legislative (tariff) amendments under the erstwhile central excise regime. In this background, various dealers are presently classifying the said product under HSN Code 5903 and applying GST at the rate of 12% (6% SGST + 6% CGST) on supplies of FIFC. However, there is an alternative and equally valid position available in the law in view of classification of FIFC may be under Chapter 52 (under Headings 5208 to 5212, based on cotton content and grammage of fabric) whereby a 5% GST rate (2.5% SGST + 2.5% CGST) would be applicable. They have stated that the alternative legal position arises due to a 2018 ruling of the Hon’ble Customs, Excise and Service Tax Appellate Tribunal (hereinafter ‘CESTAT’) in the case of Madura Coats Private Limited vs CCE, Tirunelveli [2019(365) Let 345( Tri Chennai)] in the context of central excise duty where it was held that, ‘fusible interlining cloth’ would not get classified under Central Excise Tariff Heading 5903. Further, the Hon’ble Authority for Advance Rulings for the State of Uttarakhand under the Goods and Services Tax (hereinafter ‘GST’ regime in the case of Goods wear Fashion Private limited has ruled that the said product is classifiable under Chapters 50 to 55, 58 or 60 of the GST Tariff, depending upon the primary content of the fabric.
2.3 The applicant has made reference to Chapter 52 and Tariff Heading 5903 relevant to FIFC of the Central Excise Tariff. They have summarized the chapter notes to chapter 59 amended from time to time.
