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TMI Blog2021 (7) TMI 753X X X X Extracts X X X X X X X X Extracts X X X X ..... ring with vinyl (PVC) backing" manufactured by the process of embedding coir yarn into vinyl (PVC) compound and curing by heating / cooling is rightly covered under the description "coir mats matting and floor covering"? iii) Whether "coir mats / matting / floor covering with vinyl (PVC) baking" manufactured by the process of embedding coir yarn into vinyl (PVC) compound and curing by heating / cooling would merit classification under the heading 5705 (more specifically under CTH 5705 00 49) of Chapter 57 of the 1st Schedule to the Customs Tariff? 3. The Authority for Advance Ruling Kerala issued Ruling vide order No. KER 84/2020 dated 20-05-2020 on the above issue in certain as follows:- i. Manufacture of PVC Tufted Coir Mats / Matting / Floor coverings by the process of embedding coir yarn into PVC cannot be considered as textile floor coverings of coir covered under HSN 5702,5703 or 5705. The process undertaken is a tufting process and if any, PVC or rubber or any other materials are tufted on the textile of coir, which is used as floor mats or matting, it will come under the Customs Tariff Head 5703 90 90 and is liable to GST at the rate of 12% as per Entry at Sl.No. 144 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation, as set of guillotine blades that run across the entire width of the machine chop the coir yarns into predetermined length. These bits of coir yarn later from the pile of the mat. The chopped coir yarns are at horizontal orientation at the time of chopping and they are then directly fed down a chute that turns it around 90 degrees to vertical orientation by the time they reach the top surface of the PVC compound moving underneath on the continuous Teflon belt. At this point, there is a reciprocating compacter that vertically pushes the short length of Cut coir yarns into the PVC compound just enough so that their lower and gets embedded in the PVC layer. In this way, with constant, regulated feed of coir yarn through the cutting head and feeding of vinyl compound on to the moving continuous layer of uncured vinyl and a substantially continuous series of cut coir yarn pieces (piles) extending up there from. That embryonic mat is then transported over the Teflon through progressive heating and cooling areas to cure the vinyl (PVC) compound so as to from a well cured vinyl (PVC) backing with evenly cut coir yarns firmly embedded in it in vertical orientation. This forms the fini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 03. 4.5 Attention is invited to Rule 1 of the General Rules of Interpretation of the 1st Schedule - Import Tariff of the Customs Tariff Act, 1975. As per Rule 1, for legal purpose, classification shall be determined according to the terms of the heading and any relative section or chapter notes. As per chapter Note 1 of the Chapter 57, the term "carpets and other textile floor covering" means floor covering in which textile materials serve as the exposed surface of the article when in use and includes article having the characteristics of textile floor covering but intended for use for other purposes. From the above note, it is amply clear that the basis of classification of goods falling under Chapter 57 is on the basis of the textile materials which serve as the exposed surface of that article when put to use. It is further submitted thar in the case in hand, the textile materials which serve as the exposed surface of coir mats with vinyl (PVC) backing is nothing but coir and hence such article needs to be classified as coir mats / matting products only. Further, it is submitted that the products is identified in the market as coir mats/matting/ floor covering and not as vinyl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to see that, though the test report was placed on record before the original authority at the time of hearing the same had not found a place in the impugned order. As all the above tests of classification such as essential character test, market / trade parlance test etc. and more so the definition in Chapter note 1 of Chapter 57, would suggest that the impugned goods are to be classified as coir mats/matting floor covering, the authority may be pleased to classify the impugned goods as coir mat/ matting/ floor covering. 4.8 As per Explanatory note 1 to the General Rules for interpretation of Customs tariff. "Wherein Column (2) of the schedule the description of an article or group of article under the heading is prescribed by "-" the said article or group of articles shall be taken to be a sub-classification of the article group of articles covered by the said heading. Where however the description of an article or group of article is preceded by "-", the said article or group of articles shall be taken to be a sub classification of the immediately preceding description of the article or group of articles which has "-" , where the description of an article of an group o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on made/submitted during the course of personal hearing, and other evidence on record. The issue for determination before this authority is listed as follows:- a. Whether the process of manufacture (embedding coir yarn into vinyl (PVC) compound and curing by heating / cooling) id "Tufting" or a process "other than those processes mentioned in heading 5701 to 5704" Customs Tariff and the HSN Explanatory Notes to Chapter 57? b. Whether "coir mats / matting /floor covering with Vinyl (PVC) backing" manufactured by the process of embedding coir yarn into vinyl (PVC) compound and curing by heating / cooling is rightly covered under the description "coir mats, matting and floor covering"? c. Whether "coir mats / matting / floor covering with vinyl (PVC) backing" manufactured by the process of embedding coir yarn into vinyl (PVC) compound and curing by heating / cooling, would merit classification under the Heading 5705 (more specifically under CTH 5705 00 49) of Chapter 57 of the 1st Schedule to the Customs Tariff? 7. Before we examine the issue on merit, it is noticed that the appellant has filed the instant appeal with delay of about 18 days from the due date as the Advance Ruli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peting and rugs m2 57033020 --- 100% polypropylene carpet mats with jute, rubber, latex or PU foam backing m2 57033090 --- Other m2 570390 - Of other textile materials : 57039010 --- Carpets and other floor coverings, of cotton , other than durries m2 57039020 --- Carpets and floor coverings of Coir m2 57039090 --- Other m2 5705 OTHER CARPETS AND OTHER TEXTILE FLOOR COVERINGS, WHETHER OR NOT MADE UP 570500 - Other carpets and other textile floor coverings, whether or not made up : --- Carpets : 57050011 ---- Of silk m2 57050019 ---- Other m2 --- Durries : 57050021 ---- Durries cotton m2 57050022 ---- Durries of man-made fibres m2 57050023 ---- Durries of wool m2 57050024 ---- Cotton Durries of handloom (including Chindi Durries, Cotton Chenille Durries, Rag Rug Durrie, Printed Durries, Druggets) m2 57050029 ---- Other m2 --- Of jute : 57050031 ---- Of blended jute m2 57050032 ---- Of coir jute m2 57050039 ---- Other m2 --- Carpets, carpeting, rugs, mats and mattings: 57050041 ---- knitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otherwise require according to the provisions of Rule 2 and Rule 3. 12. In view of above legal provisions, it is to be examined that under which HSN the impugned product is appropriately classifiable for deciding the rate of GST applicable to it. Schedule II of the Notification No. 1/2017 dated 28/06/2017 specifies the products with Sl.No. 142 to 146 leviable to GST @ 12% as follows: S.No. Chapter /Heading /Sub-heading / Tariff item Description of Goods 142. 5701 Carpets and other textile floor coverings, knotted, whether or not made up 143. 5702 Carpets and other textile floor coverings, woven, not tufted or flocked, whether or not made up, including "Kelem", "Schumacks", "Karamanie" and similar hand-woven rugs 144. 5703 Carpets and other textile floor coverings, tufted, whether or not made up 145. 5704 Carpets and other textile floor coverings, of felt, not tufted or flocked, whether or not made up 146. 5705 Other carpets and other textile floor coverings, whether or not made up; such as Mats and mattings including Bath Mats, where cotton predominates by weight, of Handloom, Cotton Rugs of handloom except the items covered in 219 in Schedule I" Sl.No. 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant come under tufting or a process other than those processes mentioned in heading 5701 to 5704, meaning of the word "Tufting" is to be looked into. 16. The HSN explanatory note to chapter heading 5703 provides that this heading covers tufted carpets or floor covering produced on tufting machine which, by means of a systems needles and hooks, inserts textile yarn into a pre-exiting hacking (usually a woven fabric or nonwoven) thus producing loops, or if the needles and hooks are combined with a cutting device, tufts. The yarns forming the pile are than normally fixed by a coating or rubber of plastics. Usually before the coating is allowed to dry it is either covered by a secondary backing of loosely woven textile materials, e.g. Jute or by formed rubber. It is further explained that the heading also covers tufted carpets and floor covering made using a tufting gun or made by hand. 17. The appellant has contended that there are no needles or hooks used in the manufacture of the impugned products and also the yarn is not tufted into a pre-existing backing of woven / non-woven fabric as described in the manufacturing process of tufted products falling under sub heading 5703. Hen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inished coir mat with Vinyl (PVC) backing. It may further be sheared to have a more even surface and cut to required size, as needed. From the aforesaid process and the video presentation of the manufacturing process made during hearing it is revealed that the process of manufacturing of the impugned products can correctly be termed as tufting and the products gets covered under heading 5703 in terms of the HSN explanatory note to heading 5703 as detailed above. Hence the plea of the appellant that they did not apply process if tufting is without any force and is accordingly rejected. 18. We further find that the appellant has places heavy reliance on the test report of Textile Committee laboratory and clarification given by Coir Board etc. it is noticed the Lab test report of the Textile committee only specifies about the identification of fibre as Pile of coir and backing with Rubber based polymer. The Lab has not considered the process of manufacture while giving their option and therefore its of no help to the appellant. Furter, the Coir Board certificate submitted by the appellant is relating to some other manufacturer. Moreover, it does not help the case of he appellant on a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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