TMI Blog2021 (7) TMI 752X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be covered under Tariff Item 3918 - the impugned product under discussion has non-woven material made up of PVC on surface, which is coated/laminated with plastics (PVC), which is not in dispute. Hence, by virtue of said Section 1(h) to Section XI (Textiles and Textile articles), same gets excluded from the scope of being Textile Textile articles under Section XI i.e. Chapters 50-63. There are no identifiable fibres, filaments or yarns in the exposed surface of their product but the web like structure made from 100% PVC, duly laminated/coated with PVC o the bottom. Therefore, the impugned goods do not qualify as textile materials as specified in Not 1 to Chapter 57 - the said Bill of Entry is of no help to the appellant - In the instant case, there is no fabric, woven or non-woven and no textile yarns. There is one PVC web obtained by moulding process which is then impregnated with PVC which acts as its base. Therefore, even in absence of relevant details about the product covered under the cited Bill of Entry, the goods in question cannot be claimed to be similar to that of the goods imported, based upon the explanatory notes to 5705 and the manufacturing process of the go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cess at Stage-I being production of man made monofilament for non-woven carpet top texture, the regular quality carpets mats generally have the following raw material in its compound: the plasticizer provides flexibility in the compound has a share of 26%, filler like CaCo3 or limestone powder from the mineral mines share 37%, additives and lubricants such as stearic acid, wax share 1% and suspension grade polyvinyl chloride 36%. The process at Stage-II being bonding of non-woven carpet top texture and backing coating the backing coating and adhesive are made from emulsion grade polyvinyl chloride 35%, plasticizer, additives, lubricants and fillers consisting 65%, the indications of the quantity of raw material is for a general type carpets and mats. 5. Further that, Under stage I, monofilament yarn with decitex around 270 and filament diameter range 0.38 to 0.75 mm is extruded through a perforated die plate using T-die extrusion. Extrusion is done through 3 to 4 parallel rows along the entire width of T-die and the vertically extruded mono filament in multiples immediately falls in between the grooved rollers in a water bed to form a non-woven carpet top texture and also crimpe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cription of which is specified in the corresponding entry in column (3) of the Schedules under the Notification, falling under the tariff item, sub-heading, heading or chapter, as the case may be, as specified in the corresponding entry in column (2) of the said schedules. 11. Further, explanation (iii) to Notification No. 1/2017-IGST (Rate) provides that 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. Further, Explanation (iv) provides that 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, so far as may be, apply to the interpretation of this Notification. 12. It is submitted that the product proposed to be supplied will be covered under Tariff Heading 57 of the Customs Tariff Act, 1975, which deals with Carpets and other textile floor coverings. 13. The relevant entries of the Schedules covered there under have been submitted as follows :- 13.1 Schedule II of the Notification No. 1/2017- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... --- Other 15.2 Note 1 of Chapter 57 of CTA 1975 provides the kind of products which are covered under this Heading. The said Chapter Note is reproduced below : For the purpose of this chapter, the term 'carpet and other textile floor coverings' maeans floor coverings in which textile materials serve as the exposed of the article when in use and includes articles having the characteristics of textile floor coverings but intended for use for other purposes . 16. Further, PVC carpet mats is a mat in which the exposed surface is made up of a textile material and accordingly, it would be classifiable under Chapter 75. The mats are made up of 'textile fibre', could be established through the Explanatory Note to Chapter Heading 5603, which states that 'fibre may be of natural or man-made origin. They may be staple fibres (natural or made-made) or man-made filaments or be formed in situ'. As per HSN explanatory Notes to Chapter 55. 'Man-made fibres are usually manufactured by extrusion through spinnerets (jets) having a large number of hotels (sometimes several thousand); the filaments from a large number ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings underlays, i.e., coarse fabric or felt paddig placed in between the floor and the carpet (classified according to its constituent material). b. Linoleum and other floor coverings consisting of a coating or covering applied on a textile backing (heading 59.04) 19. In view of the above understanding of 'carpets and other textile floor coverings' it is submitted that since the textile material i.e., PVC mono filament yarn, forms the exposed surface of the final product, the product is covered under the ambit of 'carpet and other textile floor coverings'. The product of the applicant neither includes any coase fabric or felt padding between the floor and carpet, not dies it use linoleum coating over its textile backing. Therefore, the goods may be classified under Chapter Heading 5705, and to be more specific under Tariff Item 5705 00 49. 20.On the other hand, Chapter 39 does not cover 'goods of Section XI (textiles and texile articles) as per clause (p) of Note 2. In as much as the 'PVC carpet mats' supplied by the Applicant is appropriately classifiable as a textile product under HSN Chapter 57.05 explained in Explanatory Note Sl. No. 2 n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wordings of the chapter, the section notes, chapter notes and the explanatory notes extracted above, we are of the considered opinion that the impugned goods is correctly classifiable under chapter heading 5703.90.90 as claimed by the assessee . 22. The applicant also places reliance on CCE, Bhubaneshwar-I Vs. Champadany Industries Ltd. Reported in 2009 (241) ELT 481 (SC), wherein the Hon ble court considered the classification of Jute Carpet under Chapter 57 and also made a finding regarding scheme of classification under Chapter 57. The relevant portion of the decision is extracted below for ready reference. 22.1 Since the goods admittedly fall under chapter 57 and consist of more than two or more textile materials, it has to be classified on the basis of that textile material which predominates by weight over any other single textile material. As in the goods in question jute admittedly predominates by weight over each other single textile material, the said carpet could only be classified as jute carpets and nothing else. 22.2 The Hon ble Court also made a finding regarding classification on basis of description of the goods, the relevant portion of which is re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty and other evidences on record. The issues for determination before us are as follows : 1. Whether the impugned goods viz. PVC Carpet mats are classifiable under Tariff Item 5705 00 49 as claimed by the applicant and held by the CGST Member or under Tariff Item 3918 as held by the SGST Member; and 2. Consequently whether the said impugned goods are chargeable to GST @ 12% in terms of entry 146 of Schedule-II of the Notification No. 1/2017-Integrated Tax (rate) dated 28.06.2017 or @ 28% in terms of Entry No. 43 of Schedule-IV of Notification No. 1/2017-Integrated Tax (rate) dated 28.06.2017 till 13.11.2017 and thereafter @ 18% in terms of Entry No. 104A of Schedule-III of Notification No. 43/2017-Inegrated Tax (rate) dated 14.11.2017. 25.2 We not that the application filed by the applicant before the Advance Ruling authority of Kerala State stands referred to this Appellate Authority in terms of Section 98(5) of CGST/SGST Act, 2017 for determination of the aforesaid issue, which could not be resolved at the lower level for difference in opinion between the two members. We also note that (a) The CGST authority is of the view that the impugned goods viz. PVC carpet mats ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es; wall of ceiling coverings of plastics The relevant extract of chapter heading 3918 in Customs Tariff is as follow : Tariff Item Description of goods Unit (1) (2) (3) 3918 Floor covering of plastics, whether or not self adhesive, in rolls or in the form of tiles: wall or ceiling covering of plastics, as defined in note 9 to this chapter 3918.10 Of polymers of vinyl chloride 3918.10.10 Wall or ceiling covering combined with knitted or woven fabrics, non-woven or felts Kg 3918.10.90 Other Kg 3918.90 Of other plastics Kg 3918.90.10 Floor coverings of linoxyne Kg 3918.90.20 Wall or ceiling coverings combined with knitted or woven fabrics, nonwovens or felts Kg 3918.90.90 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Other m2 5705.00.90 Other m2 25.5 Having reproduced the rival entries in Tariff and the said notifications, we shall now examine the claim of the applicant for classification of goods under HSN 5705. It is established that to avoid any classification disputes and GST, the Customs Tariff along with Harmonized system of Nomenclature (HSN) has been adopted for appropriate classification of any commodity under GST. Notification No. 1/2017-IGST specifically provide that : Explanation For the purposes of this Schedule (iii) Tariff item , sub-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. (iv) 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, so far as may be, apply to the interpretation of this notification. Thus, for the purpose of GST, Classification of goods under any tariff item/sub-heading/heading/chapter shall be done ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section XI of the Tariff. However, Section Notes to Section XI-Textiles and Textile articles, reads : 1. This section does not cover : a) h) Woven, knitted or crocheted fabrics, felt or non-wovens, impregnated, coated, covered or laminated with plastics, or articles thereof, of Chapter 39: 25.10 Therefore, the classification needs to be finalized only after deciding the nature of the material of which the impugned product is made up of. Once the same is found to be textile articles covered as goods of Section XI (Textiles Textiles articles) in terms of the tariff (Section XI), the same gets classifiable under Chapter 57 and if it is found to be made up of plastics covered under Chapter 39 (section VII), the same shall be covered under Tariff Item 3918. 25.11 We observe that the impugned product under discussion has non-woven material made up of PVC on surface, which is coated/laminated with plastics (PVC), which is not in dispute. Hence, by virtue of said Section 1(h) to Section XI (Textiles and Textile articles), same gets excluded from the scope of being Textile Textile articles under Section XI i.e. Chapters 50-63. 25.12 We further note t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oloured, design printed or otherwise decorated. Note 3 to Chapter 56 reads : 3. Heading 56.02 and 56.03 cover respectively felt and nonwovens, impregnated, coated, covered or laminated with plastics or rubber whatever the nature of these materials (compact or cellular) Heading 56.03 also includes nonwovens in which plastics or rubber forms the bonding substance. Heading 56.02 and 56.03 do not, however, cover : (a) Felt impregnated, coated, covered or laminated with plastics or rubber, containing 50% or less by weight of textile material or felt completely embedded in plastics or rubber (Chapter 39 or 40) (b) Nowovens, either completely embedded in plastics or rubber, or entirely coated or covered on both sides with such materials, provided that such coating or covering can be seen with the naked eye with no account being taken of any resultant change of colour (Chapter 39 or 40); or (c) Plates, sheets or strips of cellular plastics or cellular rubber combined with felt or nonwovens, where the textile material is present merely for reinforcing purposes (Chapter 39 or 40). Note 2 to Chapter 59 reads : 1. Except where the context otherwise requires, f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed surface in their goods is textile materials and hence the same are covered under definition of carpets and other textile floor coverings in terms of the Note 1 to Chapter 57, which states that, For the purposes of this chapter, the term carpets and other textile floor coverings means floor coverings in which textile materials serve as the exposed surface of the article (emphasis supplied) We shall therefore need to turn our attention to understanding what constitutes textiles and textile materials. The definition of Textile cited by the appellant is as follows : A textile was originally of woven fabric, but the terms textile and the plural textiles are now also applied to fibres, filaments and yarns, natural and manufactured and most products for which these are a principal raw material we also find that the definition of Textile and Textile material as available in the Fairchild Books Dictionary of Textiles is as under : Textile Derived from the Latin term textiles, which is based on the verb texere, to weave. 1. A broad classification of materials that can be utilized in constructing fabrics, including textile fibres and yarns. 2. Designates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Entry, the goods in question cannot be claimed to be similar to that of the goods imported, based upon the explanatory notes to 5705 and the manufacturing process of the goods in question. 25.19 Moreover, the applicant has been manufacturing and trading the impugned goods and classifying the same under Chapter 39 in the pre-GST era. The applicant has not brought on record any change in the composition, nature or manufacturing process of the said goods from the pre-GST era to now which has compelled them to approach AAR for classification. The only change noticed is the higher rate of GST for Tariff Heading 3918 than for Tariff Heading 5705. But, it is settled law that the rate of duty/tax cannot be a criterion for deciding the classification of any product. The classification has to be decided as per the terms of headings, sub-headings and tariff items and the relevant section/chapter notes/sub-notes in terms of the interpretative rules to the Customs Tariff. 25.20 The appellant has also contended that applying bonding material does not make the product impregnated, coated, covered or laminated. It appears that the appellant wants to claim that their goods are not impregn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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