AAR ruling on GST on Polyester Viscose fusing Interlining Woven Fabric

In re Goodwear fashion Pvt Ltd.  (GST AAR Uttarakhand)

Whether Interlining Fabrics is classified under HSN Code 5903 or should be classified as per the blend of Yarn (in chapter 52-55).

Specimen fabric i.e. ‘Polyester Viscose fusing Interlining Woven Fabric, partially covered with plastic which leads to plastic coated pattern that is visible on its one side’ does not fall under HSN Code 5903, however, it being partially coated or partially covered with plastics and bearing designs will fall under chapters 50 to 55, 58 or 60 as per the chapter note 2(a)(4) of the Chapter 59 of the GST Tariff.

FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING UTTARAKHAND

1. This is an application under Sub-Section (1) of Section 97 of the CGST /SGST Act, 2017 (herein after to be referred as “Act”) and the rules made thereunder filed by M/s Goodswear Fashion Pvt. Ltd., Plot No. 42, Sector-6, HE, SIDCUL, Pant Nagar, Rudrapur, Distt. Udham Sing Nagar, Uttarakhand – 263153, seeking an advance ruling on the question :

“Whether Interlining Fabrics is classified under HSN Code 5903 or should be classified as per the blend of Yarn (in chapter 52-55). “

2. Advance Ruling under GST means a decision provided by the authority or the appellate authority to an applicant on matters or on questions specified in sub section (2) of section 97 or sub section (1) of section 100 in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant.

3. As per the said subsection (2) of Section 97 of the Act ibid advance ruling can be sought by an applicant in respect of :

(a) Classification of any goods or services or both

(b) Applicability of a notification issued under the provisions of this Act,

(c) Determination of time and value of supply of goods or services or both,

(d) Admissibility of input tax credit of tax paid or deemed to have been paid

(e) Determination of the liability to pay tax on any goods or services or both

(f) Whether the applicant is required to be registered

(g) Whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both within the meaning of that term

In the present case, applicant has sought advance ruling in respect of leviability of GST, if any, on the

(a) Classification of Interlining Fabrics under HSN Code 5903 or as per the blend of Yam (in chapter 52-55).”

Therefore, with the instant application seeking classification of goods, in terms of Section 97(2)(a) of CGST/SGST Act, 2017, the present application is hereby admitted.

4. Accordingly opportunity of personal hearing was granted to the applicant on 30.10.2018. Shri Vishal Kapoor, Managing Director of the applicant and Shri Hemant Singhal, Chartered Accountant appeared for personal hearing on the said date and made additional submissions. They agreed upon that sample may be drawn by the jurisdictional officer in the presence of the applicant or their representative and the same may get tested from the Government Approved Lab for testing of conditions mentioned in chapter note 2(a)(4) of Chapter 59 of the GST Tariff. Mrs. Preeti Manral, Deputy Commissioner, SGST-Dehradun appointed as concerned officer by the competent authority of State GST was also present during the hearing proceedings.

5. In the present application, applicant has requested for advance ruling on :

“Whether Interlining Fabrics is classified under HSN Code 5903 or should be classified as per the blend of Yarn (in chapter 52-55).”

6. Before going into the details of the instant question on which the ruling has been sought by the applicant, it is important to understand the pattem/design of the specimen fabric.

6.1. In this context, vide letter dated 29.11.2018 the jurisdictional officer was requested to draw 5 samples of specimen ‘fabric’ with sufficient quantity & lead sealed in double envelope and to send 1 sample to be tested, out of these 5 samples, to the lab situated at Northern India Textile Research Association (NITRA), Block M, NITRA, Sector 23, Sanjay Nagar, Ghaziabad, Uttar Pradesh-201002 to sort out the following queries regarding specimen fabric, as such –

(i) Specify the details of specimen under testing.

(ii) Is the fabric partially coated or partially covered with plastics?

(iii) Does such coating or covering lead to design /patterns on the subject fabric?

6.2. In this regard, a test-report has been received from the NITRA in this office on 17.01.2019 which is given as under –

In view of the above test-report, it is evident that the specimen fabric is a ‘Polyester Viscose fusing Interlining Woven Fabric’, partially covered with plastic which leads to plastic coated pattern that is visible on one side of the fabric.

6.3. In this context, the relevant chapter note of CHAPTER 59 (Impregnated, coated, covered or laminated textile fabrics; textile articles of a kind suitable for industrial use) of the GST Tariff is reproduced as under –

“2. Heading 5903 applies to :

(a) textile fabrics, impregnated, coated, covered or laminated with plastics, whatever the weight per square metre and whatever the nature of the plastic material (compact or cellular), other than :

(1) fabrics in which the impregnation, coating or covering cannot be seen with the nacked eye (usually Chapters 50 to 55, 58 or 60); for the purpose of this provision, no account should be taken of any resulting change of colour;

(2) products which cannot, without fractuating, be bent manually around a cylinder of a diameter of 7 mm, at a temperature between 15°C and 30°C (usually Chapter 39);

(3) products in which the textile fabric is either completely embedded in plastics or entirely coated or covered on both sides with such material, provided that such coating or covering can be seen with the naked eye with no account being taken of any resulting change of colour (Chapter 39);

(4) fabrics partially coated or partially covered with plastics and bearing designs resulting from these treatments (usually Chapters 50 to 55, 58 or 60);

(5) plates, sheets or strip of cellular plastics, combined with textile fabric, where the textile fabric is present merely for reinforcing purposes (Chapter 39); or

(6) textile products of heading 5811;”

On going through the above chapter note and as per test-report from NITRA, we observe that the specimen fabric i.e. “Polyester Viscose fusing Interlining Woven Fabric’ being a partially covered with plastic which leads to plastic coated pattern that is visible on one side of the fabric will fall under Chapters 50 to 55, 58 or 60 as per chapter note 2(a)(4) of the relevant chapter 59 of the GST Tariff.

In this regard, we find that the specimen fabric is a “Polyester Viscose fusing Interlining Woven Fabric, partially covered with plastic which leads to plastic coated pattern that is visible on one side of the fabric and the same will fall under chapter 50 to 55, 58 or 60 of the GST Tariff.

It is pertinent to mention that the ruling is given in respect of specimen drawn and identical goods only.

Ruling

In view of the above, we hold that the specimen fabric i.e. ‘Polyester Viscose fusing Interlining Woven Fabric, partially covered with plastic which leads to plastic coated pattern that is visible on its one side’ does not fall under HSN Code 5903, however, it being partially coated or partially covered with plastics and bearing designs will fall under chapters 50 to 55, 58 or 60 as per the chapter note 2(a)(4) of the Chapter 59 of the GST Tariff.