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TMI Blog2024 (1) TMI 974X X X X Extracts X X X X X X X X Extracts X X X X ..... 'Products' and the applicable IGST rate under sub-section (7) of Section 3 of the Customs Tariff Act read with Notifications issued on import of said 'products' for imports through the port of Chennai. 2. Applicant has stated as follows in their statement of relevant facts having a bearing on the question(s) raised enclosed with the CAAR-1 application: 2.1. The applicant, inter-alia, is engaged in the business of purchase and sale of said 'products' in India. The applicant has proposed to import said 'products' more specifically described in Table-A as under Table 'A' No. Item Description Width in MM 1 Nylon Taffeta Roll 45.00 2 Nylon Taffeta Roll 30.00 3 Nylon Taffeta Roll 127.00 4 Nylon Taffeta Roll 25.00 5 Nylon Taffeta Roll 25.00 6 Nylon Taffeta Roll 32.00 7 Nylon Taffeta Roll 64.00 8 Nylon Taffeta Roll 38.00 9 Nylon Taffeta Roll 40.00 10 Nylon Taffeta Roll 38.00 11 Nylon Taffeta Roll 32.00 12 Nylon Taffeta Roll 32.00 13 Nylon Taffeta Roll 25.00 14 Nylon Taffeta Roll 10.00 15 Nylon Taffeta Roll 204.00 16 Nylon Taffeta Roll 153.00 17 Nylon Taffeta Roll 102.00 18 Single Side Oven Ed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... N 580710. The copy of the invoice/ proforma invoice/ email issued by them for sale of rolls to Mean Light is attached with said application as Exhibit. * There is no alternate use of the products except as labels * The labels are stitched to products to provide information about washcare or supplier etc. The printing of such information is not legible & durable on the plain fabric and hence, a layer of coating has to be put to enable printing on the same. * The Rolls made-up of Taffeta has a polyamide coating of different thickness depending on the requirements of the customers. The polyamide coating on the product facilitates printing of the product/ washing information on the labels which is later stitched to the products. It is submitted that the coated/calendered side of the rolls shines compared to the side without coating/calendering. * Further, it is submitted that typically the rolls shall be of the width 10mm to 50mm but at times the supplier has a standard size of the rolls say 300mm or 500mm, which will subsequently be cut to the size for use as labels by the customers. 2.3 The applicant has asked specific question(s) on which Advance Ruling is required: a) Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etimes a framed space to take a hand-written inscription. (B) Badges and similar articles of any textile material (including knitted). This category includes badges, emblems, "flashes", etc., of a kind normally sewn to the outer part of wearing apparel (sporting, military, local or national badges, etc., badges bearing the names of youth associations, sailors ' cap badges with the name of a ship, etc.). The above articles are classified in the heading only if the fulfil the following conditions: (1) They must not be embroidery. The inscriptions or motifs on the articles classified here are generally produced by weaving (usually broche work) or by printing. (2) They must be in the piece, in strips (as is usually the case) or in separate units obtained by cutting to size or shape but must not be otherwise made up. This heading does not include lables, badges and similar products, which have been embroidered (heading 58.10) or made up otherwise than by cutting to shape or size (heading 61.17, 62.17, or 63.07). The products proposed to be imported by the applicant are meant to be used to capture trademark, wash care instructions and other details like country of manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpretation can be summed up thus: Where no definition is provided in the statute for ascertaining the correct meaning of a fiscal entry, the same should be construed as understood in common parlance or trade or commercial parlance. Such words must be understood in their popular sense. 'The strict or technical meaning or the dictionary meaning of the entry is not be resorted to. The nomenclature given by the parties to the word or expression is not determinative or conclusive of the nature of the goods. The same will have to be determined by application of the well-settled rules or principles of interpretation which have been referred to as "common parlance " rule, "trade or commercial parlance " rule, "common sense rule of interpretation" and "user test". The application of the principles will again depend on the facts and circumstances of each case. No test or tests can be said to be of universal application. Each case will have to be decided by applying one or more rules of interpretation depending upon the facts of that particular case. Further, the Supreme Court in the case of DUNLOP INDIA LTD. & MADRAS RUBBER FACTORY LTD reported in 1983 (13) E.L.T. 1566 (S.C.) in para 31 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cant has made a local procurement of the Rolls within India and the same is supplied by the domestic supplier under the HSN 580710. In view of the above, it is submitted that it is well established by the applicant that the products proposed to be impelled are understood as 'labels' by the persons in the trade dealing with the subject goods. Therefore, applying to the ratio of the said judgments cited above, the applicant submitted that the subject products proposed to be imported shall mean 'labels' and are classifiable under the chap.er heading 580710. 3.4 Functional Test:- The Hon. Supreme Court m the case of ATUL GLASS INDUSTRIES LTD. 1986 (25) E.L. T. 473 (S.C.) has held that classification of the product can also be based on functional test i.e. the function the product performs. In this case the dispute was classification of Screens fitted in motor vehicles as wind screens, rear screens and door screens. The court observed as follows while approving the classification as part of car. 8. The test commonly applied to such cases is : How is the product identified by the class or section of people dealing with or using the product? That is a test which is attr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Industries Ltd. v. Union of India and Others - 1985 (22) E.L.T. 3. Where the goods are not marketable that principle of construction is not attracted. Indian Aluminium Cables Ltd. v. Union of India and Others - (1985) 3 S.C.C. 284 = 1985 (21) E.L.T. 3 (S.C.). The question whether thermometers, lactometers, syringes, eye-wash glasses and measuring glasses could be described as 'glassware' for the purpose of the Orissa Sales Tax Act, 1947 was answered by the Orissa High Court in State of Orissa v. Janta Medical Stores (1976) 37 STC 33 in the negative. To the same effect is the decision of this Court in Indo International Industries v. Commissioner of Sales Tax, Uttar Pradesh, (1981) 3 S.C.R. 294 = 1981 (6) E.L.T. 325 (S.C.), where hypodermic clinical syringes were regarded as falling more accurately under the entry relating to "hospital equipment and apparatus" rather than under the entry which related to "glass-wares" in the U.P. Sales Tax Act. Thus, the applicant submitted that the classification of any product is based on ultimate function which it performs. 3.5 No alternate use available of the products One side or both sides of Rolls proposed to be imported by the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot cover only the labels, but also the similar materials. 3.6 textile labels printed or otherwise are classifiable under HSN 580710:- CTH 580710 does not require a label to be printed for classification under the heading. Further, there is no such requirement in the chapter and section notes. The applicant relics on the below paras of the decision in the case of Bijay Kumar Poddar (supra). The High Court observed that if the unprinted label is not label in strict sense then in that case the material imported can be said similar to label. The relevant extract is reproduced below: 20. Sub-heading 58.07 provides and covers labels and similar articles. If it is not label in strict sense. In that case the material imported can be said similar to label.... 23. Unprinted labels if not accepted giving narrow meaning to it. It should be accepted as similar articles as that of label. Specially when in the trade world it is known as label. 3.7 The Rolls would be imported in standard sizes and can be cut as per the requirement of the customer:- The Rolls comes in a specified size as maintained by the suppliers and commonly accepted in the trade practices. The applicant shall import the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls used by private individuals (boarding school pupils, soldiers, etc.) to identify their personal property; the latter variety sometimes bear initials or figures or comprise sometimes a framed space to take a hand-written Inscription." On plain reading of the above, it is evident that a label shall bear individual inscriptions or motifs viz. Trademark/ constituent textile etc. The explanatory notes clearly states the conditions for classifying the goods under the heading 5807. The same is reproduced below for ready reference: "(1) They must not be embroidery. The inscriptions or motifs on the articles classified here are generally produced by weaving (usually broche work) or by printing. (2) They must be in the piece, in strips (as is usually the case) or in separate units obtained by cutting to size or shape but must not be otherwise made up." On plain reading of condition number 1, it is evident that the goods following under the heading 5807 shall have inscriptions or motifs on them produced by wearing or by printing and it shall not be produced by way of embroidery. The importer had made a reference to the point that, if the goods are not covered under labels the same m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us forums including DRI, CESTAT etc. It is interesting to find out the insights provided in this book in the subject matter regarding the labels. The same is reproduced below (as it is) for ready reference: "Label of this heading is a small piece of cloth attached to an article to designate its origin, owner, contents, use, or destination. It is also a distinctive name or trademark identifying a product or manufacturer. It may be woven, knitted or crocheted. It may be printed or coloured woven; plain or embossed; big or small. Since there are no standard specifications with aspect to dimensions, it needs to be distinguished from made ups of a kind classified under Chapters 61-63. The design, content of text, etc., are the crucial determining factors. In terms of Interpretative Rule 1 and Rule 2(a), labels, whether they are made ups or not, should be classified under this heading, provided they should have an essential character of a label. However, Section Note 7(a) to Section XI is equally important. As per this Note, any fabric cut into a square and a rectangle will not be considered a made up. So, labels cut from a roll of ribbon without closed or hemmed edges do not qualif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted. 3. If the rolls are coated with polyamide or any polymeric material and the coating is visible to the naked eye, the goods are rightly classifiable under 59039090. 4. If the rolls are of knitted fabric, the width is less than 30 cm and not coated or coating is not visible to the naked eye, then the goods are classifiable under 6003 3000. 5. If the rolls are of knitted fabric and the width is more than 30 cm, then the same shall be classifiable as follows: a. If the rolls are warp knitted, the same shall be classifiable under the heading 6005 8-digit level the classification depends on whether the goods are unbleached/bleached/dyed/printed. b. If the rolls are weft knitted, the same shall be classifiable under the heading 6006 8-digit level the classification depends on whether the goods are unbleached/bleached/dyed/printed. 5. A personal hearing in the matter was conducted on 21.12.2023 in office of the CAAR, Mumbai. During the personal hearing the authorized representatives of M/s. Mean Light Co., Shri S. S. Gupta, Advocate and Shri Vaibhav Shah, Advocate both reiterated their earlier submissions made in the applications to CAAR, Mumbai. They also cited some case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sification. A three Judge Bench of the Hon'ble Supreme Court had also relied upon the function and end use in the determining the classification in Indian Tool Manufacturers Vs. Asstt. Collector of Central Excise, Nasik & Others reported in 1994 (74) ELT 12 (SC). In the present case, the rolls are coated/processed specifically to enable legible and durable printing, which is not possible on normal fabric as it get smudged and disappeared quickly. Accordingly, the basis of the classification i.e. 'not coated or coating is not visible' is incorrect and hence, the rolls proposed to be imported by the applicant do not fall under HSN 58063200, 5407 or 5512. The classification under Chapter 59 shall be applicable to woven fabrics of Chapters 50 to 55 and headings 5803 and 5806 etc. The note 1 of the Chapter 59 is reproduced below: 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. The applicant submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bed in Table 'A' (supra) and collectively referred to as 'Products', Customs Authority for Advance Rulings has concurred with the submissions put forth by the the authorized representatives Shri S.S. Gupta, Advocate and Shri Vaibhav Shah, Advocate present for M/s. Mahaveer Impex. In the instant case the same advocates Shri S. S. Gupta and Shri Vaibhav Shah are present for the applicant M/s. Mean Light Co. and moreover, they have submitted the very same arguments and sought classification of the said 'products' under Heading 5807 10 and has advocated that the said 'products' are covered by entry no. 153 of Schedule II of Notification 1/2017 - IGST (Rate) dated 28 June 2017. In the case of M/s. Mahaveer Impex, the Customs Authority for Advance Rulings has ruled that the said 'products' are specifically classifiable under sub-heading 5807 1020 and said 'Products' are covered under the entry no. 153 of Schedule II of Notification 1/2017 - IGST (Rate) 28 June 2017. I have gone through the observations of the Authority in the case of M/s. Mahaveer Impex and I am of the view that the Authority in the case ibid has deliberated upon every aspe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, excluded from this heading. (4) Bias binding consisting of strips, with folded edges, of a width, when unfolded, not exceeding 30 cm, cut on the cross from warp and weft fabrics. These products are cut from wide fabrics and not provided, therefore, with a selvedge, either real or false. These products remain classified here when watered ("moire"), embossed, printed, etc. Bolducs This heading also covers narrow fabrics (bolducs) of a width usually ranging from a few mm to 1 cm, consisting of warp (parallelised yams, monofilaments or textile fibres) without weft but assembled by means of an adhesive. This heading excludes:- (a) Bandages, medicated or put up in forms or packings for retail sale (heading 30.05). (b) Narrow woven fabrics with woven fringes, braided galloons and braids (heading 58.08). (c) Narrow woven fabrics more specifically covered by other headings, e.g., those having the character of: (1) Woven labels, badges and similar articles, in strips (heading 58.07 or 58.10) 6.3. Chapter heading 58.07 covers labels, badges and similar articles of textile materials, in the piece, in strips or cut to shape or size, not embroidered. 5807 10 - Woven 5807 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10mm to 305mm and can be considered as narrow woven fabric but for the exclusion clause whereby it is mandated that this heading excludes: (c) Narrow woven fabrics more specifically covered by other headings, e.g., those having the character of (1) Woven labels, badges and similar articles, in strips (heading 58.07 or 58.10). The HSN Explanatory notes to CTH 58.07, subject to the conditions specified, cover the labels of any textile material. These include labels of a kind used for marking wearing apparel, household linen, mattresses, tents, soft toys, or other goods. They are utilitarian labels bearing individual inscriptions or motifs. Such labels include, inter alia, commercial labels bearing the trade name or trade mark of the manufacturer or the nature of the constituent textile ("silk', "viscose rayon", etc.) and labels used by private individuals (boarding school pupils, soldiers, etc.) to identify their personal property; the latter variety sometimes bear initials or figures or comprise sometimes a framed space to take a hand written inscription. Condition that these products must not be embroidery. Goods will not have embroidery on them. Duc to this explanation in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... article which reflects images. It is referred to as a glass mirror only because the word glass is descriptive of the mirror in that glass has been used as a medium for manufacturing the mirror. The basic or fundamental character of the article lies in its being a mirror." It has been observed by their Lordship in Commissioner of Customs & C. Ex., Amritsar v. D.L. Steels - 2022 (381) E.L.T. 289 (S.C.) that "...well-settled principle that words in a taxing statute must be construed in consonance with their commonly accepted meaning in the trade and their popular meaning. When a word is not explicitly defined, or there is ambiguity as to its meaning, it must be interpreted for the purpose of classification in the popular sense, which is the sense attributed to it by those people who are conversant with the subject matter that the statute is dealing with. This principle should commend to the authorities as it is a good fiscal policy not to put people in doubt or quandary about their tax liability. The common parlance test is an extension of the general principle of interpretation of statutes for deciphering the mind of the law-maker." Applying the same ratio, the product commonly i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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