TMI Blog2019 (3) TMI 923X X X X Extracts X X X X X X X X Extracts X X X X ..... t made up means assembled by sewing, gumming or otherwise. The top in Model 3 is fully stitched or assembled by sewing and hence would be a made up . Thus, Model 2,3 and 4 is a set containing made up articles of textiles for Top of salwar suit and pieces of fabrics for Bottom and Dupatta of salwar suit. Model 2, 3 and 4 have some additional cutting and stitching on the Top made up article which is either a complete Top of salwar, in case of Model 3, or is an unfinished Top of a salwar suit, in case of Model 2 and 4. They are also sold as Chudi material by the Applicant which contains made up article of Top and fabrics of Bottom and Dupatta. Together all three constitute an unstitched salwar suit containing made up articles of textile. As per Rule 2 to the general Interpretative Rules above, the incomplete articles has the essential characteristic of a made up article of a salwar suit and are not mere pieces of fabric. Therefore, Model 2, 3 and 4 would be classifiable as a salwar suit. Dependng on the textile material, Model 2, 3 and 4 would be classified under various subheadings under Tariff heading of 6211 i.e 621142 / 621143/621149. Model 1 salwar/chudidar sets s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... milar items and have their showrooms at Tirunelveli, Chennai and Coimbatore. They are registered under GST with Registration No. 33AFCR4022H1ZR. They have preferred an Application seeking Advance Ruling on Whether the Salwar/Churidhar sets, comprising of three sets of Tops, Bottom and Dupatta, whether partially stitched/ neck work done, or not would remain as fabrics under Chapters 50,52,54,55 based on the constituent material and attract a total 5% GST; or they are classifiable under Chapters 61 to 63, thereby attracting a total of 5% if their sale price is less than ₹ 1,000 and 12 % GST if their sale price is more than ₹ 1,000 They have applied for Advance Ruling in Form GST ARA - 01 and enclosed challan for payment of fees of ₹ 5,000/- each under sub-rule (1) of Rule 104 of CGST Rules and SGST Rules 2017. 2.1 The Applicant has stated that one of the products being sold by them is Salwar / Churidar Sets, comprising of three piece of cloths viz., Top, Bottom and Dupatta. They have enclosed photographs of the subject items for reference, and have described as follows:- 1) Both Top and Bottom not stitched- a model where no stitching has been d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Fabrics are classifiable under chapters 50 to 55 of First Schedule to the Customs Tariff Act 1975 on the basis of their constituent materials and attract a uniform GST rate of 5% with no refund of the unutilized input tax credit. The Applicant has stated that mere cutting and packing of fabrics into pieces of different lengths from bundles or thans, will not change the nature of these goods and such pieces of fabrics would continue to be classifiable under the respective heading as the fabric and attract the 5% GST. The Applicant has sought the correct classification of these items and applicable rate of GST. 3. The Applicant was heard in person. They stated that they sell Salwar sets unstitched and stitched. In some cases, the fully unstitched sets will also have some work/ embroidery/ hemming done and will not be just cut from the bales/ than by their suppliers. In other cases, the top/bottom is variously stitched or neck done or dupatta stitched/ work done, etc. They stated that Board s Circular dated 3/11/2000 and 27/ 10/2017 may be relevant in these cases. They also submitted that under VAT they were treated as readymade sets/ apparels of fabric. They submitted copies of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 6 th October 2017. The decision of the council, as available in the minutes of the meeting is reproduced as under: Serial No.4: Clarification regarding Unstitched Salwar suits 53. The Joint Secretary (TRU-I), CBEC. stated that fabrics are classified under Chapters 50 to 55 and attract tax at the rate of 5% with no refund of unutilised input tax credit. Mere cutting and packing of fabrics into pieces of different lengths from bundles and thans would not change the nature of these goods and such pieces of fabrics would continue to be classified under respective chapter headings as fabrics and attract 5% tax. He stated that the proposal was to clarify that unstitched salwar suit is a fabric cut from lumps or thans on which value addition is done with embroidery, handwork, patchwork, etc. and that such pieces of fabrics would continue to be classified under Chapters 50 to 55 of the First Schedule to the Customs Tariff Act, 1975 and attract 5% rate of tax. The Council agreed to the suggestions. On this CBIC had issued Circular No 13/ 13/2017 dated 27.10.2017 stating: Doubts have been raised regarding the classification of Cut pieces of Fabrics under GST. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ladies salwar suit. Any embroidery on a fabric piece or certain embellishment thereon does not change the basic nature of their being a fabric. The chapter 63 covers garment, including the unstitched garments which may or may not be sufficiently completed to be identifiable as garments or parts of garments. However, heading 6307 would not cover a fabric pieces or a set of pre-packed fabric pieces, even if embroidered or embellished. Such set of fabric pieces would attract GST at the rate of 5%. From the above, it is seen that Model 1 of applicant consisting of Both Top and Bottom not stitched i.e. three pieces of fabrics (Top/ Bottom/ Dupatta) where no stitching has been done and the pieces are merely cut into fabrics from bales/ than, is merely pieces of fabric even if they have embroidery or embellishments and as per the clarification above are classified under Chapters 50 to 55 of the Customs Tariff Act depending on the textile material used. 5.4. The above clarifications is regarding pieces of fabric cut form bales/ than of different lengths put up for sale as a set, even when these fabric have some embellishment or embroidery. Such fabrics after sale are cut into shape ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hape and hence is a made up . The Top in Model 4 is also not a fabric in square or rectangle but has the neck portion cut and worked on. This too would qualify as a made up . It is seen from Note 7 (O to Section XI of Customs Tariff that made up means assembled by sewing, gumming or otherwise. The top in Model 3 is fully stitched or assembled by sewing and hence would be a made up . Thus, Model 2,3 and 4 is a set containing made up articles of textiles for Top of salwar suit and pieces of fabrics for Bottom and Dupatta of salwar suit. General Rule 2 for the Interpretation of Customs Tariff states 2. (a) Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished articles has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), presented unassembled or disassembled. It is seen that Model 2, 3 and 4 have some additional cutting and stitching on the Top made up article which is either ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 62114210 --- Kurta and salwar with or without duppatta 62114290 --- Other 62114300 -- Of man-made fibres 621149 -- Of Other textile materials : 62114910 --- Of wool or fine animal hair 62114990 --- Other Dependng on the textile material, Model 2, 3 and 4 would be classified under various subheadings under Tariff heading of 6211 i.e 621142 / 621143/621149. 5.5 Therefore, Model 1 salwar/chudidar sets supplied by the Applicant is classifiable as Fabrics under Chapter 50 to 55 depending on the material. The applicable rate of tax would be 2.5% CGST as per applicable Sl.no (depending on the material) in Schedule I of Notification 1/2017-Central Tax(Rate) dt. 28.06.2017 as amended and 2.5% SGST as per applicable Sl.no (depending on the material) in Schedule I of Notification No. II(2)/CTR/532(d-4)/2017 vi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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