TMI Blog2021 (1) TMI 599X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. The applicant s product fusible interlining cloth of cotton fabric would undoubtedly be classifiable under Heading 5903 only. We, therefore, conclude that the product fusible interlining cloth of cotton fabric of the applicant is classifiable under Heading 5903 of the First Schedule to the Customs Tariff Act, 1975 - 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 cloth for cotton fabrics will not be covered under Chapter 52 of the First Schedule to the Customs Tariff Act, 1975. - GUJ/GAAR/R/90/2020 - - - Dated:- 17-9-2020 - SANJAY SAXENA AND MOHIT AGRAWAL, MEMBER Present for the applicant : Shri Kejul Mehta BRIEF FACTS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Heading Description 5903 Textile fabrics, impregnated, coated, covered or laminated with plastics, other than those of heading 5902. 4. The applicant has stated that the Chapter Notes were amended from time to time and has tabulated the relevant amendments as below: Sr.No. Date of amendment Particulars 01. Central Excise Tariff Act, 1985 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 naked 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 fracturing, be bent manually around a cylinder of a diameter of 7 mm, at a temperature between 15oC and 30oC (usually Chapter 39); ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation, coating or covering cannot be seen with the naked eye (usually Chapters 50 to 55, 58 or 60) are excluded from the purview of Heading 59.03; that as per Note 2(a)(3) of Chapter 59, fabrics entirely coated with plastic material on both sides are not covered in Heading 59.03 but are covered in Chapter 39; that similarly according to Chapter Note 2(a)(1) of Chapter 59, fabrics partially coated or partially covered with plastics and bearing designs are also excluded from the purview of Heading 59.03; that in view of the above, textile fabrics including the fusible inter-lining cloth to merit classification as coated fabrics under Heading 59.03 of Central Excise Tariff, should have a continuous and adherent film or layer or plastic on one side of the fabric surface and the fabric should be impervious and satisfy the conditions prescribed in Note 2 of Chapter 59; that assessments in each case would depend on visual and if necessary chemical examination in the light of the above; that accordingly, CBEC had clarified that the fabrics which are partially coated or covered with plastics and bearing designs are also excluded from the purview of Heading 5903 and covered under the Chapter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... classified under Chapter Heading 59.03 of the Central Excise Tariff. 9. The applicant has submitted that the said Circular was challenged before the Hon ble High Court of Madras who in their judgement reported in 2004 (163) ELT 164 (Mad.) had stated that the said circular is illegal and ultravires and liable to be quashed; that w.e.f. 01.07.2017, erstwhile Central Excise Act was subsumed under the Goods and Services Tax (GST) regime. Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017 provided rate of GST applicable on different goods and as per Para(iii) of the Explanation of the said notification, Tariff item 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; that accordingly, Customs Tariff Act, 1975 is to be referred for the classification of the goods under the GST regime; that the entry under the HSN code 5903 and the relevant Chapter Notes for Chapter 52 and 59 as discussed above, under the Customs Tariff Act, 1975 are identical to the respective entry and the Chapter Notes as mentioned in the Central Excise Tariff Act; that acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lting from these treatments are not covered under the HSN code 5903. The fusible interlining manufactured by the applicant have partial coating of thermoplastics with a specific design at equal distance visible in fabrics which make the product easily marketable. Therefore, as per chapter note 2(a)(4) the product cannot be classified under chapter 5903 and is required to be classified under Chapter 50 to 55, chapter 58 or 60 depending upon the weight of the cotton in the fabrics. (vi) The fabric manufactured by the applicants cannot be said to be impregnated, coated, covered or laminated with plastic. For the aforesaid purpose the fabric is required to be continuously impregnated, coated, covered or laminated with plastic throughout the entire surface of fabrics. Hence also the fabric cannot be classified under chapter 5903. The applicant will rely upon Test reports of the fabrics at the time of hearing. (vii) The fusible interlining cloth manufactured by the applicant is identical to the one manufactured by M/s. Madura Coats pvt.ltd.. In Madura Coats pvt.ltd., Hon ble Tribunal of Chennai held that the fusible interlining cloth would not be classified under the HSN code 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following judicial decision/Advance Ruling, wherein the said product is classified under the Chapter 52-55 depending upon the primary content of the fabric: (a) Madura Coats private limited v/s. Commissioner of Central Excise, Tirunelveli (2019(365) ELT 345 (Tri.Chennai)). (b) Uttarakhand Advance Ruling authority under the GST regime in the Application made by M/s. Goodswear Fashion private limited. DISCUSSION FINDINGS: 11. We have considered the submissions made by the applicant in their application for advance ruling as well as the arguments/discussions made by their representative at the time of personal hearing. We have also considered the issues involved on which Advance Ruling is sought by the applicant. 12. At the outset, we would like to state that the provisions of both the Central Goods and Services Tax Act, 2017 and the Gujarat Goods and Services Tax Act, 2017 are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to similar provisions of the GGST Act. 13. Based on the submission of the applicant as well as the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eyed vide the aforesaid circular, M/s. Madura Coats preferred a writ petition in the High Court of Madras being WP No.354 of 1999 wherein vide order and judgement dated 30.09.2003, the Hon ble High Court of Madras held that a bare perusal of the tariff heading and notes in issue, it was clear that but for the Chapter Note 2(c), which was introduced under the Finance Act, 1989, such fusible interlining would be coming within Chapters 50 to 55 and only by virtue of introduction of Chapter Note 2(c) of Chapter 59, such fusible interlining came within the scope of Chapter 59.03 and once such Chapter Note 2(c) of Chapter 59 was omitted under the Finance Act, 1995, it is obvious that the position which was available prior to introduction of such Chapter Note (c) revived, that in such background, issuance of Circular would be clearly against the statutory provisions. The Hon ble Court also noted that the circular was also against the provision of Section 37B of the Central Excise Act as the Board could not shut down the quasi-judicial power of the authorities and in view of the aforesaid finding, the Circular issued by the Board was held to be invalid and illegal. (h) The said order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hennai. It is found that the order dated 19.06.2018 is with regard to an appeal filed by M/s. Madura Coats pvt.ltd. against Order-in-Appeal No.330/2011 dated 17.10.2011 passed by the Commissioner of Central Excise(Appeals), Madurai i.e. it pertains to an issue of pre-GST regime. The issue involved in this case is that the appellant M/s. Madura Coats pvt.ltd. had originally classified their product coated fusible interlining fabrics of cotton under Heading 5903 consequent to insertion of Note 2(c) in Chapter 59 of the Central Excise Tariff Act, 1985(CETA) w.e.f 01.03.1989. The said chapter note was omitted w.e.f 16.03.1995 following which the appellants sought reclassification under Heading 5207. After hearing both sides, the Appellate Tribunal came to the conclusion that since Chapter Note 2(c) itself is no longer in existence and the impugned goods otherwise did not satisfy the requirements in Chapter Note 2(a) read with CBEC Circulars, impugned goods will not get classified under CETH 5903. We find that the applicant has relied upon this order of CESTAT in support of their contention. We also find that they have relied upon the order of the Advance Ruling Authority of Uttarakha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olyurethane : 5903 20 10 --- Imitation leather fabrics, of cotton 5903 20 90 --- Other 5903 90 - Other: 5903 90 10 --- Of cotton 5903 90 20 --- Polyethylene laminated jute fabrics 5903 90 90 --- Other 17. Chapter Notes to Chapter 59 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) reads as under: NOTES : 1. Except where the context otherwise requires, for the purposes of this Chapter, the expression textile fabrics applies only to the woven fabrics of Chapters 50 to 55 and headings 5803 and 5806, the braids and ornamental trimmings in the piece of heading 5808 and the knitted or crocheted fabrics of headings 6002 to 6006. 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 naked 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, withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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; (b) fabrics painted with designs (other than painted canvas being theatrical scenery, studio backcloths or the like); (c) fabrics partially covered with flock, dust, powdered cork or the like and bearing designs resulting from these treatments; however, imitation pile fabrics remain classified in this heading; (d) fabrics finished with normal dressings having a basis of amylaceous or similar substances; (e) wood veneered on a backing of textile fabrics (heading 4408); (f) natural or artificial abrasive powder or grain, on a backing of textile fabrics (heading 6805); (g) agglomerated or reconstituted mica, on a backing of textile fabrics (heading 6814); or (h) metal foil on a backing of textile fabrics (generally Section XIV or XV). 6. Heading 5910 does not apply to: (a) transmission or conveyor belting, of textile material, of a thickness of less than 3 mm; or (b) transmission or conveyor belts or belting of textile fabric impregnated, coated, covered or laminated with rubber or made from textile yarn o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Examples of such fabrics are those impregnated with substances designed solely to render them crease-proof, mothproof, unshrinkable or waterproof (e.g., waterproof gabardines and poplins), Textile fabrics partially coated or partially covered with plastics and bearing designs resulting from these treatments are also classified in Chapter 50 to 55, 58 or 60. (2) That the products are not rigid, i.e. they can, without fracturing, be bent manually around a cylinder of a diameter of 7 mm, at a temperature between 15 degrees centigrade and 30 degrees centigrade. (3) That the textile fabric is not completely embedded in, nor coated or covered on both sides with, plastics. Products not meeting the requirements of subparagraph(2) or (3) above usually fall in Chapter 39. However, textile fabric coated or covered on both sides with plastics where the coating or covering cannot be seen with the baked eye, or can be seen only by reason of a resulting change in colour, usually falls in Chapter 50 to 55, 58 or 60. Except in the case of textile products of headijg 58.11, textile fabrics combined with plates, sheets or strip of cellular plastics, where the textile fabric is present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ressed 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. 20. 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, 1989. 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 Circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court, in its order dated 05/01/2009 in WA No. 507 of 2005, refrained from expressing any view on the legality of the said Circular so that the assessing officer could apply his judgment without any bias. The court however, set aside the impugned Circular that the assessing officer had quoted in a show cause notice in violation of the provisions of Section 37B of the CEA 44. Such setting aside of the impugned Circular restored the SCN. The Division Bench however, categorically stated that it was not done on the ground that the circular is ultra vires. (vii) It therefore, appears that reference to the Single Bench judgment in the above mentioned case does not help in deciding the classification of the applicant s. The fact that CBEC appealed against the Single Bench judgment in 2005 also indicates that it continues defending Circular No. 433/66/98-CX-6 dated 27/11/1998 and has not made any further course correction. Circular No. 433/66/98-CX-6 dated 27/11/1998, therefore, reflects CBEC s view on the classification of fusible interlining cloth as on date. 20.2 In view of the above, we find that CBEC Circular No. 433/66/98-CX-6 dated 27/11/1998 is relevant even today and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said Chapter covers cotton yarns, we will be referring to Headings 5208 to 5212 of the said Chapter which covers fabrics. The same reads as under: 5208 WOVEN FABRICS OF COTTON, CONTAINING 85% OR MORE BY WEIGHT OF COTTON, WEIGHING NOT MORE THAN 200 G/M2 - Unbleached : 5208 11 -- Plain weave, weighing not more than 100 g/m2 : 5208 12 -- Plain weave, weighing more than 100 g/m2: 5208 13 -- 3-thread or 4-thread twill, including cross twill : 5208 19 -- Other fabrics : Bleached : 5208 21 -- Plain weave, weighing not more than 100 g/m2: 5208 22 -- Plain weave, weighing more than 100 g/m2: 5208 23 -- 3-thread or 4-thread twill, including cross twill : 5208 29 -- Other fabrics : - Dyed : 5208 31 -- Plain weave, weighing not more than 100 g/m2: 5208 32 -- Plain weave, weighing more than 100 g/m2: 5208 33 -- 3-thread or 4- thread twill, including cross twill : 5208 39 -- Other fabrics : 5208 41 -- Plain weave, weighing not more than 100 g/m2: 5208 42 -- Plain weave, weighing more than 100 g/m2: 5208 43 -- 3-thread or 4- thread twill, including cross twill : 5208 49 -- Other fabrics ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5211 49 -- Other fabrics : - Printed : 5211 51 -- Plain weave : 5211 52 -- 3-thread or 4-thread twill, including cross twill : 5211 59 -- Other fabrics : 5212 OTHER WOVEN FABRICS OF COTTON - Weighing not more than 200 g/m2 : 5212 11 00 -- Unbleached 5212 12 00 -- Bleached 5212 13 00 -- Dyed 5212 14 00 -- Of yarns of different colours 5212 15 00 -- Printed - Weighing more than 200 g/m2 : 5212 21 00 -- Unbleached m2 5212 22 00 -- Bleached m2 5212 23 00 -- Dyed 5212 24 00 -- Of yarns of different colours 5212 25 00 -- Printed 21.1 Chapter notes of Chapter 52 read as under: SUB-HEADING NOTE: For the purposes of sub-headings 5209 42 and 5211 42, the expression denim means fabrics of yarns of different colours, of 3 thread or 4 thread twill, including broken twill, warp faced, the warp yarns of which are of one and the same colour and the weft yarns of which are unbleached, bleached, dyed, grey or coloured a lighter shade of the colour of the warp yarns. 21.2 Explanatory notes to HSN with respect to Headings 5208 and 5209 read as under: Cotton fabrics are produced in g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would also like to rely on a few judgements which support our view. The same are mentioned hereunder: (1) Order No. 33/WBAAR/2019-20 dated 11.11.2019 issued by the West Bengal Advance Ruling Authority in respect of M/s. Sadguru Seva Paridhan Pvt Ltd. wherein it was held that fusible interlining fabric of cotton is classifiable under Heading 5903 in Chapter 59 of the First Schedule to the Customs Tariff Act, 1975. (2) Order No.11/2019-20 dated 12.03.2020 issued by the Uttarakhand State Advance Ruling Authority in respect of M/s. The Ruby Mills ltd. wherein it was held that fusible interlining fabric of cotton is classifiable under Heading 5903 of the GST Tariff Act, 2017. (3) Order dated 19.03.2020 of the Appellate Authority for Advance Ruling, West Bengal in the case of Appeal Case No. 15/WBAAAR/APPEAL/2019 filed by M/s. Sadguru Seva Paridhan pvt.ltd. wherein the Order No. 33/WBAAR/2019-20 dated 11.11.2019 issued by the West Bengal Advance Ruling Authority was upheld. 23. In light of the foregoing, we rule, as under R U L I N G Question : Whether the article Fusible Interlining cloth for cotton fabrics manufactured by the applicant falls under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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