TMI Blog2020 (7) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... e rate is 2.5% CGST provided vide SI.No.217 of Schedule I of Notification 1/2017 CT( R) dated 28.06.2017 as amended and 2.5% SGST provided vide S.No. 217 of Schedule I of Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017. Woven Fabric backing with Non-woven Fabric falls under CTH 5407 - HELD THAT:- Woven Fabric backing with Non-woven Fabric falls under CTH 5407. Further classification is not possible as only further technical details are not provided. The applicable rate is 2.5% CGST provided vide Sl.No.217 of Schedule I of Notification 1/2017 CT(R) dated 28.06.2017 as amended and 2.5% SGST provided vide S.No. 217 of Schedule I of Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017. Covers for pillows made of knitted or woven fabrics - HELD THAT:- Covers for pillows made of knitted or woven fabrics are classifiable under CTH 63049239. Covers for latex blocks made of knitted or woven fabrics are classifiable under CTH 63049289. Cover for mattress made of knitted or woven fabrics are classifiable under CTH 63041990. The Goods attract CGST @ 2.5% in case selling price is less than ₹ 1000/piece as per SI.No.224 of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Sl. No. 132B of Schedule -II of Notification No. 01/2017-CT (R) dated 28.06.2017 as amended by Nation No. 34/2017-C.T. (R) dated 13 th October 2017 and SGST @ 6% as per Sl.132B of Schedule -II of Notification No. II(2)/CTR/532(d-41/2017 vide G.O. (Ms} No. 62 dated 29.06.2017 as amended. - TN/17/AAR/2020 - - - Dated:- 20-4-2020 - MS. MANASA GANGOTRI KATA, IRS, ADDITIONAL COMMISSIONER AND THIRU. KURINJISELVAAN.V.S., M.SC.,(AGRI.),M.S.A., MEMBER Note: Any appeal against this Advance Ruling order shall lies before the Tamil Nadu State Appellate Authority for Advance Rulings, Chennai as under Sub-Section (1) of CGST Act / TNGST Act 2017, within 30 days from the date on the ruling sought to be appealed 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 same provisions under the Tamil Nadu Goods and Service Tax Act. --------------------------------- M/s. Global Textile Alliance India Pvt Ltd., 149, Chenn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of yarns in longitudinal and latitude direction. Woven fabrics emerges after Warping and Weaving. The raw material used is Yarn - Polyester, POY, chenille, which are sourced from various mills. The yarn sourced from various spinning mills, warped at first and then weaving is done in the Jacquard machines. After weaving, to make the fabric softened where the fabric is pierced through bunch of sharp needles (NEEDLE PUNCHING) to get the effect. Finally, fabric will be inspected and dispatched to the Customers. c. Woven Fabric backing with Non-Woven Fabric: Weaving is interlacement of yarns in longitudinal and latitude direction. Woven fabrics emerge after Warping and Weaving. The raw material used is Yarn - Polyester, POY, chenille, which are sourced from various mills.The yarns sourced from various spinning mills, warped at- first and then weaving is done in the Jacquard machines. The woven fabrics as such will not be good enough to withstand the wear and tear required for end use applications by the customers. Hence Poly Propylene non-woven fabric falling under CH 5603 will be bonded with the woven fabric, at the back side. The bonding process will be done with the u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yarns will be placed in creel zone for feeding the respective yarn to chenille machine. Yarn formation: Next step is pile yarn pass through rotor section to reach Caliber then Rotary blade where the pile yarns are cut in to 1 to 2 mm piles. Same time core yarns passed through calibre and hold piles then pile and core yams are twisted together to get chenille effect. Chenille cops: After cutting section, chenille yarn is passes through yarn guides to wind on empty cops. This process output is called as chenille cops. Each cops will weigh around 300 grams. Yarn winding section: The Small cops weighing about 300 grams, which is very small for further process, and it has faults like thick, very thin, bad yarn. The small cops will be feed in to winding machine to make big bobbins weighing around 2kg and winding sensors detect the yarn faults. After winding: For 9Nm and 5Nm - The label will be pasted on every bobbin and send to dye house for dyeing. After dyeing process, the dyed yarn will be subjected to yarn quality test like shades, appearance etc. after quality checking we will rewind the dye package to get big bobbins weighing around 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lley (Two Bobbin as core and two bobbins as effect), which will be threading to the godets. The core yarn will be passed through water jets, where water treatment is given and through air jet, where air is blown at 10kg/Cm2. The effect will be passed through air jet, where air is blown at 10kg/Cm2. All 4 plyed yarn will pass through heater (220 ). Again, it will be threaded through godets. Then it is wound on paper cone to get the final bobbin weighing around 4 Kg, which will be subject to testing for all properties and the required norms. Then it will be graded and packed in boxes and exported. This yarn is captively used in the manufacture of fabric also. 2.3 The applicant referring the General Rules for Interpretation of Import Tariff has interpreted the goods merits classification as under: Knitted Fabric: It is not impregnated, coated, covered or laminated textile fabrics and it will not fall under CH 5903, as per Chapter Note 2 as well as under 5907 as per chapter note no 5 of Chapter 59. The correct classification is under Chapter 60 only. Therefore, it will attract 5% GST as per SI.No.221 of Schedule I of Notification No.1/2017 CT(R) Woven Fabrics : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as raw material for PPP yarn. For all other fabrics, they use yarn locally sourced. They also stated that they will submit for each product the purchase orders, copies of sale invoice, test reports, export invoices and export shipping bills and requested to be heard again. 3.2 The applicant was personally heard again on 21.05.2019. They submitted the test reports, sale/export invoice, purchase order. They stated that for made ups covers for pillows, latex block, mattresses, foot runner, pillow sheet the material is knitted fabric or woven(with and without non-woven bonded with glue behind) or woven with needle punch process. They also manufacture yarn of different composition Poly Propylene extrusion yarn, poly propylene texturized yarn 2 ply and polyester texturized yarn 4 ply. They also stated that they will submit purchase invoice for raw materials for each, photographs of made ups, production process for different kinds of yarns. They mainly purchase dyed yam for fabric manufacture. They, undertook submit details of how much decitex each variety of yarn. The applicant submitted Original test reports for Knitted Fabrics, Woven Fabrics, Non-Woven Fabrics, Chenille Yarn, Poly P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s superimposed on each other at acute or right angles. These layers are bonded at the intersections of the yarns by an adhesive or by thermal bonding; As per the exclusion clause of Chapter Notes 2(a)(1) 5(a) of Chapter 59, the textile fabrics, which are subjected to some special treatment by way of impregnation/ lamination / covering/coating and the effect of such change cannot be seen with naked eye, are not classifiable under Chapter 5903 5907 respectively. Accordingly, such fabrics wherein the very nature of fabrics is lost and turns into a different identifiable product of a kind suitable for industrial use. E.g. Imitation leather fabrics, Painting canvas, Tracing cloth, Book binding cloth, Floor covering, Textile wall covering, Conveyor belt etc., are classifiable under Chapter 59 and thereby attracting 12% GST Rate. However, when the texture of fabrics does not change after the processes of impregnation/ lamination/ covering /coating and the effect of such change in texture cannot be seen with the naked eye, the products are respectively classifiable under Chapter 52, 54, 55 or 60 and 5% GST is chargeable. All knitted fabrics, irrespective of their constitu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turized Yarn; Polyester Texturized Yarn. 6.1 The applicant is a Private Limited Company and are into manufacturing Knitted Fabric, Woven Fabric, woven Fabric bonded with Non -woven Fabric, made-ups, Chenille Yarn, PP Extrusion Yarn, PP Texturized Yarn and Polyester Texturized Yarn. They have sought the classification and the rate of GST applicable on the goods manufactured and supplied by them. The applicant has furnished the manufacturing process of each goods and the classification applicable to their goods as per their interpretation. 6.2 In terms of explanation (iii) and (iv) to Notification No. 1/2017 - Central Tax (Rate) dt. 28-06-2017, tariff heading, sub-heading, heading and chapter shall mean respectively a tariff item, sub-heading, heading and chapter as specified in the First Schedule to the Customs Tariff Act, 1975 and the rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975, including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall be applied for the interpretation and classification of goods. Further HSN being a reliable source based on which Customs Tariff is structured, gives a detailed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that such fabrics are clearly of a kind used for clothing, furnishing or similar purposes. Therefore, all knitted fabrics regardless of the raw materials of cotton, polyester etc. used to make them will be classified under chapter 60. Knitted fabrics are further classified as follows in Chapter 60: 6001- PILE FABRICS, INCLUDING LONG PILE FABRICS AND TERRY FABRICS, KNITTED OR CROCHETED 6002 - KNITTED OR CROCHETED FABRICS OF A WIDTH NOT EXCEEDING 30 CM, CONTAINING BY WEIGHT 5% OR MORE OF ELASTOMERIC YARN OR RUBBER THREAD, OTHER THAN THOSE OF HEADING 6001 6003 - KNITTED OR CROCHETED FABRICS OF A WIDTH NOT EXCEEDING 30 CM, OTHER THAN THOSE OF HEADING 6001 OR 6002 6004 - KNITTED OR CROCHETED FABRICS OF A WIDTH EXCEEDING 30 CM, CONTAINING BY WEIGHT 5% OR MORE OF ELASTOMERIC YARN OR RUBBER THREAD, OTHER THAN THOSE OF HEADING 6001 6005 - WARP KNIT FABRICS (INCLUDING THOSE MADE ON GALLOON KNITTING MACHINES), OTHER THAN THOSE OF HEADINGS 6001 TO 6004 6006 - OTHER KNITTED OR CROCHETED FABRICS Further classification is possible only when further details such as dimensions, weight etc. are provided. Further, as per the rate notification under GST, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n warp and weft looms. Certain woven fabrics are. however, excluded. for example (a) Carpets and other floor coverings ( Chapter 57 ) (b) Pile fabrics or chenille fabrics of heading 58.01. terry towelling and similar woven terry fabrics of heading 58.02, gauze of heading 58.03 . tapestries of heading 58.05 , narrow woven fabrics of heading 58.06 and woven fabrics of metal thread or metallised yarn of heading 58.09 (c) Coated, impregnated, etc., fabrics of headings 59.01 and 59.03 to 59.07 ; tyre cord fabrics of heading 59.02 or textile fabrics for technical uses of heading 59.11 (d) Goods which have been made up within the meaning of Note 7 to Section XI (see Part (II) of this General Explanatory Notes) The woven fabrics of Chapters 50 to 55 may be unbleached, Scoured, bleached, dyed. made from yarns of different colours, printed, clouded, mercerized, glazed, moire, raised (napped), goffered, fulled, gassed (singed), etc. They include unfigured and figured fabrics, and broche fabrics in which designs are produced by additional warp or weft threads introduced during weaving. These fabrics are not regarded as embroidered fabrics. Chapter n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen further details such as dimensions, weight etc. are provided. The rate schedule under SI.No. 217 of Schedule I of Notification No. 01/2017-C.T.(R) dated 28.06.2017, provides the rate for Woven Fabric for man-made textile fabrics falling under CTH 5407, 5408. The applicable rate is 2.5% CGST provided vide Sl.No.217 of Schedule I of Notification 1/2017 CT(R) dated 28.06.2017 as amended and 2.5% SGST provided vide S.No. 217 of Schedule I of Notification No. II(2)/CTR/532(d-4)/2017 vide G.O.(Ms) No. 62 dated 29.06.2017 7.3 woven Fabrics Bonded with Non- Woven Fabric: The raw material used is Yarn-Polyester, POY, Chenille sourced from various mills. The applicant has stated that the yarn is warped at first and weaving is done in the jacquard machines. After weaving, Poly Propylene non-woven fabric falling under CTH 5603 is bonded with the woven fabric at the back side, using heated licocene Glue (PP glue). Then on inspection the fabric is supplied. The applicant has opined that the product will fall under CTH 5407. The Test report 299/2019-20 describes the sample as Woven Fabric with back end(Non-Woven) and the test result states that woven - one direction Polypropyle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S.No. 217 of Schedule I of Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017 7.4 Covers of Pillow, Latex Block, Mattresses: The applicant has stated that different types of knitted or woven fabrics are involved in the process of making the above items. Once the fabrics, manufactured in-house is done the fabric is taken to cutting table for cutting into bits and panels according to the specifications given for making covers for (a) pillow (b) Latex (c) Mattress. After cutting, the panels and bits are checked for quality and measurement and the same are sent for sewing, where other materials and accessories such as zippers, pullers, labels, brand tags are joined in stitching and finished cover, the final product is checked for quality, packed and dispatched to the customers. The test reports have been furnished in respect of the Upholstery fabric and not the final products. The applicant claims classification as knitted fabric under CTH 6006. As examined under Para 7.1 above, only fabrics are classifiable under CTH 6006. The products under discussion are not plain fabrics but covers for Pillow, Latex Block and Mattress, which are made as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 63041940 --- Bed sheets and Bed covers of cotton, Handloom 63041990 --- Other 63042000 Bed nets, of warp knit fabrics specified in Sub-heading Note 1 to this Chapter - Other : 630491 -- Knitted or crocheted : 63049110 --- Silk belt 63049120 --- Woollen cushion cover 63049190 --- Other 630492 -- Not knitted or crocheted, of cotton : --- Counterpanes 63049211 ---- Of Handloom 63049219 ---- Other --- Napkins 63049221 ---- Of Handloom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed or woven fabrics are classifiable under CTH 63049289 . Cover for mattress made of knitted or woven fabrics are classifiable under CTH 63041990. The Goods classifiable under CTH 63 will attract CGST @ 2.5% in case selling price is less than ₹ 1000/piece as per Sl.No.224 of Schedule I of Notification 1/2017 CT(R) dated 28.06.2017 as amended and SGST @2.5% in case selling price is less than ₹ 1000/ piece as per Sl.No. 224 of Schedule I of Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017 and in case of selling price more than ₹ 1000/piece then it will attract 6% CGST as per S.No. 171 of Schedule II of Notification 1/2017 CT(R) dated 28.06.2017 as amended and SGST @6% as per S.No. 171 of Schedule II of Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017 7.5 Foot Runner So Pillow Sheet: The fabric involved in producing Foot runner and Pillow Sheet are Woven Fabric(manufactured in-house) and Paper silk Fabric(outsourced). The manufacturing process involves making the customer logo embroidery on the Omega Fabric through Computerized Embroidery machine at outsource, cut the fabrics to specification and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n ₹ 1000/piece then it will attract 6% CGST as per S.No. 171 of Schedule II of Notification 1/2017 CT(R) dated 28.06.2017 as amended and SGST 0(1,6% as per S.No. 171 of Schedule II of Notification Ms. No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017 7.6 Chenille Yarn: The applicant has stated that they buy Raw materials like core and pile yarn from outside which are subjected to creeling, twisting and then wound on empty cops to form chenille cops weighing 300 gms. These cops are fed to winding machine to make big bobbins weighing around 2 kg. After winding, labels are pasted and sent to dye house, which is checked for quality and used in the weaving section for fabric production. The applicant has stated that the yarn is captively used but they may go for commercial sales. The test report No. 303/2019-20 is furnished wherein the customer sample reference is quoted as Chenille yarn . The test results states that the yarn is polyester with 100% composition of Polyester with the description Polyester Chenille yarn and HS code 5606. From the submissions, it is evident that the product is a type of special yarn obtained by a specified process and the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.2017 as amended and SGST -6% as per S.No. 138 of Schedule II of Notification No. ll(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017 7.7 Poly Propylene Extrusion Yarn : The raw material Polypropylene white chips and colored Poly Propylene granules are procured from outside and fed into extrusion machine through colortronics system in the required ratio. The chips and granules are churned, grinded and melted in screw and barrel and the melt will be metered through pump to get the required denier and will be squeezed out in filament from packs. After certain process, the yarn is wound on a paper cone which will be subject to testing and is captively used for manufacture of fabric. The applicant has stated that they may go for commercial sales. The test report furnished by the applicant No. 304/2019-20 states the description of the yarn as 100% Poly Propylene Filament Yarn falling under HS code 5402. Poly Propylene Texturized Yarn: The raw material Polypropylene fully drawn yarn will be creeled on trolley, which will be threading to the godets through water jets, where water treatment is given and through air, where air jet is blown at 10 kg/cm2. Again thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... --- Artificial filament yarn It is observed that the rate notification provides the rate based on the four-digit level classification of these yarns. This yarn is captively used in the manufacture of fabric. In future, may go for commercial sales also. Therefore, the classification will vary depending on whether it is put up for retail sale or not. It is further noticed that whether the yarns are put up for retail sale or otherwise i.e., All Synthetic filament yarn such as nylon, polyester, acrylic, etc. falling under CTH or Group 5402,5404,5406 is leviable to CGST @ 9% vide S.No. 159 of Schedule III of Notification 1/2017 CT(R) dated 28.06.2017 and SGST @ 9% vide S.No. 159 of Schedule II of Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017 up to 12th October 2017 and thereafter leviable to CGST @ 6% as per SI. No. 13213 of Schedule - II of Notification No. 01/2017-C.T.(R) dated 28.06.2017 as amended by Notfn. No. 34/2017-C.T. (R) dated 13th October 2017 and SGST g 6% as per SI. No. 13213 of Schedule- II of Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017 as amended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... classifiable under CTH 63021090. They will attract CGST @ 2.5% in case selling price is less than ₹ 1000/piece as per Sl.No.224 of Schedule I of Notification 1/2017 CT(R) dated 28.06.2017 as amended and SGST 42.5% in case selling price is less than ₹ 1000/ piece as per Sl.No. 224 of Schedule I of Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No.62 dated 29.06.2017 and in case of selling price more than ₹ 1000/piece then it will attract 6% CGST as per S.No. 171 of Schedule II of Notification 1/2017 CT(R) dated 28.06.2017 as amended and SGST @6% as per S.No. 171 of Schedule II of Notification Ms. No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017. 6. Chenille yarn made of Polyester is classifiable under CTH 56060020. The applicable rate of CGST is 6% as per SI.No.138 of Schedule II of Notification 1/2017 CT(R) dated 28.06.2017 as amended and SGST -6% as per S.No. 138 of Schedule II of Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017. 7. Poly Propylene Extrusion Yarn: Poly Propylene Texturized Yarn; Polyester Texturized Yarn are synthetic yarns classifiable under CTH 5402 when not put up for retail sale a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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