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2021 (1) TMI 585 - AAR - GSTClassification of goods - product Fusible Interlining Fabrics of Cotton’ - classifiable under Chapter 52 or Chapter 59? - HELD THAT:- The dispute regarding classification of fusible interlining cloth, which is partially coated with plastic by the dot printing process i.e. whether it is covered under Chapter 52 to 55 or Chapter 59, has repeatedly come up before different authorities. In it’s Circular No.24/Coated Fabric/88-CX.1 dated 02.09.1988, CBEC has referred to the production process. The finished woven fabric passed over preheated rolls having a high surface temperature and the heated substance was then pressed to a printing roll having fine dots engraved on it. High-density polyethylene powder was taken in a hopper that sat on the engraved printing roll, filling the dots. As a result, the pre-heated fabric got printed with plastic dots. The powder in between the engraved dots was scrapped by a doctor blade provided in the hopper. The dot printed cloth then passed through a heated chamber where the plastic melted and fused with the piece of cloth. CBEC concluded that the fusible interlining merited classification under Heading 5903 if the above printing process covered one side of the fabric with a continuous and adherent film or layer of plastic that made the fabric impervious. In Circular No.5/89 dated 15.06.1989, CBEC discussed the significance of the insertion of Chapter 2(c) in Chapter 59 by the Finance Act, 1959. After the insertion of the said note, the fusible interlining cloth made by discrete coating with plastic by dot printing process became classifiable under Heading 5903. CBEC clarified that before that, such cloth had been covered under Chapter 52 to 55, depending upon the textile materials used. Chapter Note 2 (c) was omitted w.e.f. 16.03.1995. CBEC vide Circular No.433/66/98-CX.6 dated 27.11.1998 tried to clear the air about the classification of fusible interlining cloth in the context of removal of Chapter Note 2(c) from Chapter and drew attention to the Finance Act, 1995 that broadly aligned the Central Excise Tariff to the Tariff Act. The significance of the alignment was that the Explanatory Notes to the HSN code or the Chapter Notes to Chapter 59 of the Tariff Act had not contained any provision like Chapter Note 2(c) to Chapter 59 of the Central Excise Tariff Act, 1985. The said Chapter Note 2(c) was, therefore, deleted by the Finance Act, 1995 - The difference arises from the application of the provisions of the explanatory notes to the HSN Code. In the said explanatory notes to Chapter 59, textile fabrics which were spattered by spraying with visible particles of thermoplastic material and were capable of providing a bond to other fabrics or materials on the application of heat and pressure were classifiable under Heading 5903. According to Circular No.433/66/98-CX.6 dated 27.11.1998, such classification should be treated as an exception to Chapter Note 2(a)(4) to Chapter 59. CBEC Circular No. 433/66/98-CX-6 dated 27/11/1998 is relevant even today and has persuasive value. Further, Chapter Note 2(a)(4) to Chapter 59 says that fabrics partially coated or partially covered with plastics and bearing designs resulting from these treatments are excluded from Heading 5903 and are usually covered in Chapter 50 to 55, 58 or 60, depending on the materials used. At the same time, according to the Explanatory notes to the HSN code, textile fabrics which are spattered by spraying with visible particles of thermoplastic material and are capable of providing a bond to other fabrics or materials on the application of heat and pressure are classifiable under heading 5903. Also, the process of manufacture of the fusible interlining of fabrics of cotton. On going through the headings, chapter note of Chapter 52 as well as the explanatory notes to HSN with respect of the headings 5208 to 5212, we find that it does not cover laminated fabrics or fabrics coated with plastics. Hence, it can be safely concluded that ‘Fusible Interlining fabrics of cotton’ will not be covered under Chapter 52 of the First Schedule to the Customs Tariff Act, 1975 - The product ‘Fusible Interlining Fabrics of Cotton’ of the applicant M/s Girish Rathod(Jay Ambey), Ahmedabad is correctly classifiable under Heading 5903 of Chapter 59 of the First Schedule to the Customs Tariff Act, 1975.
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