TMI Blog2024 (1) TMI 974X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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. Due to this explanation in the HSN explanatory notes the proposed imports will get covered under exclusion clause of CTH 5806. In the instant case the goods will be imported without printing of labels on them. Applicant has argued that the textiles labels printed or otherwise are classifiable under HSN 5807 10. Various courts in a plethora of cases have held that HSN explanatory notes have a persuasive effect in deciding the matters of classification. Keeping in view the observation of Apex Court in various decisions referred in forgoing paras as well as the decision of High Court decision in case of BIJAY KUMAR PODDAR VERSUS UNION OF INDIA [ 1999 (9) TMI 106 - HIGH COURT AT CALCUTTA] , it is found that the said products have to be considered as articles similar to labels of textile materials in strips and accordingly are classifiable under heading CTH 58.07.1 do not find any grounds to disagree with the High Court decision in case of M/s Bijay Kumar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 37 Double Side Slit Satin Roll 20.00 38 Double Side Slit Satin Roll 30.00 39 Double Side Slit Satin Roll 15.00 40 Single Side Oven Edge Polyester-Satin Roll 20.00 41 Single Side Oven Edge Polyester-Satin Roll- Black 20.00 42 Single Side Satin Black Roll 25.00 43 Double Side Slit Satin Roll- Black 32.00 44 Double Side Slit Satin Roll- Black 35.00 45 Double Side Slit Satin Roll 32.00 46 Double Side Oven Edge Polyester-Satin Roll 32.0 The applicant has submitted that their supplier has classified the products under HSN code 580710. As per First Schedule of Customs Tariff Act, 1962, the basic customs du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lassification of the products proposed to be imported? c) Whether the products are covered by entry no. 153 of Schedule II of Notification 1/2017 -IGST (Rate) 28 June 2017? d) If answer to (c) above is negative, what is IGST rate under sub-section (7) of Section 3 of the said Customs Tariff Act read with Notifications issued on import of the products? 3. Applicant's Interpretation:- 3.1 Products classifiable under HSN 580710:- Chapter no. 58 covers 'Special woven fabrics; tufted textile fabrics; lace; tapestries; trimmings; embroidery'. Further, Chapter heading 580710 applies to 'labels, badges and similar articles of textile materials, in the piece, in strips or cut to shape or size, not embroidered'. The extract of chapter heading 580710 is reproduced below: Tariff Item Description of goods 5807 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 10 10 --- Of cotton ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 manufacturing, size, make etc. on the products for the reference of the customers. The photos depicting the end use of the product is attached with application. The applicant relics on the Ruling of The Customs Authority for Advance Ruling - Mumbai in the case of M /s Mahaveer Impex CAAR/Mum/ARC/01/2023 dated 17 January 2023 and the decision of the Calcutta High Court in the case of M/s Bijay Kumar Poddar vs Union of India 2000 (126) ELT 393 (Calcutta). The relevant extract of Ruling in the case of M/s Mahaveer Impex CAAR/Mum/ARC/01/2023 dated 17 January 2023. Para 6.5 of the Ruling on Page -13 .... I also find that various courts in a plethora of cases have held that HSN explanatory notes have a persuasive effect in deciding the matters of classification. Keeping in view the observation of Apex Court in various decisions referred in forgoing paras as well as the decision of High Court decision in case of M/s Bijay Kumar Poddar vs Union of India , I find that the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 36 has observed as follows: 31. It is well established that in interpreting the meaning of words in a taxing statute, the acceptation of a particular word by the Trade and its popular meaning should commend itself to the authority. 36. We are, however, unable to accept the submission. It is clear that meanings given to articles in a fiscal statute must be as people in trade and commerce, conversant with the subject, generally treat and understand them in the usual course. But once an article is classified and put under a distinct entry, the basis of the classification is not open to question. Technical and scientific tests offer guidance only within limits. Once the articles are in circulation and come to be described and known in common parlance, we then see no difficulty for statutory classification under a particular entry. Further, the Bombay High Court in the case of M/s. Kantilal Nanchand and Co. report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind 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 attracted whenever the statute does not contain any definition. Porritts and Spencer (Asia) Ltd. v. State of Haryana (19 78) 42 S. T. C. 433 = 1983 (13) E.L.T. 1607 (S. C). It is generally by US functional character that a product is so identified. In Commissioner of Sales Tax, UP. v. Macneill Barry Ltd., Kanpur (1985) 2 SCALE 1093 = 1986 (23) E.L.T. 5 (S.C), this Court expressed the view that ammonia paper and ferro paper, used for obtaining prints and sketches of site plans could not be described as paper as that word was used in common parlance. On the same basis the Orissa High Court held in State of Orissa v. Gestelner Duplicators (P) Ltd. (1974) 33 STC. 333 that stencil paper could not be classified as paper for the purposes of the Orissa Sales Tax Act. It is a matter of common experience that the identity of an article is associated with Us primary function. It is on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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 applicant shall be coated/ processed specially to enable printing. It is a common practice of the retailers to stitch labels to the products to provide wash care information or details about the supplier/ make etc. The printing of such information is not legible durable on the plain fabric as in the normal fabric printing is not clear and printing gets smudged. Further, it is important that the information printed should stay for longer period and even after washing. Accordingly, the fabric undergoes a process like fabric washing by aqua hydrogen dioxide liquid caustic, Dyeing, fluorescent bleacher, high pressure calendaring or by coating which enable printing on the same. The said processes/ coating on the fabric facilitates printing on the fabric, which is later stitched to the products. It is submitted that the coated/ processed side of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld 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 Rolls as per the standard size maintained by the supplier and subsequently sell the same to the Indian customers who will cut to size as per their requirements. Further, the Rolls have multiple Industry applications like garments, toys, automobile and the same are required to be cut in the size as per the product's requirement and hence, it does not come with marking. In case the Rolls are given a specific marking for cutting then the same will have a limited application and can be used only by a particular customer/ industry. However, the applicant will import the Rolls and then identify the customer, and hence, the Rolls cannot come with a specific cut marking. 4. Chennai Customs House which is the concerned jurisdictional Customs Commissionerate has responded to the subject application vide letter dated 19.12. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ize 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 may be considered as qualifying under similar articles of labels and thereby falls under the heading 5807. Without prejudice to going into the merits of whether the goods can be treated as similar articles of labels, it is important to consider whether similar articles of labels are covered under the heading 5807. The heading 5807 covers Labels, badges and similar articles of textile materials, in the piece, in strips or cut to shape or size, not embroidered . It appears the correct interpretation of the goods covered under 5807 is Labels , Badges and similar articles of textile materials . The explanatory notes also clearly made this distinction in the notes and specified Labels of any textile material and Badges and similar articles of any textile material separately. Therefore, the content ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpretative 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 qualify as made ups in terms of Section Note 7. Instead, they ought to be treated as ribbon in running length (under heading 5806). But, if such ribbons have regular cut markings and they bear typical designs of a label, they shall he treated as labels in strips of this heading. This should not mean that ribbons cut at significant large regular intervals would automatically qualify as label. Sometimes, a ribbon or tape has a continuous pattern without any breaks. Such a tape should not be treated as label tape. Instead, it should be treated as a narrow-woven fabric of heading 5806. Fom the foregoing, it is observed that for qualifying a textile article as a label, the goods shall have the following characteristics: The label can be woven, knitted or crocheted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 laws to strengthen their argument that the products in question are correctly classifiable under CTH 5807 more particularly under 5807 10. It is pertinent to mention that no one appeared from the concerned Jurisdiction Commissionerate i.e. Chennai Customs House during the said Personal Hearing either online or in person. Although, Chennai Commissionerate has submitted comments/reply reproduced in para 4 (supra). During the Personal Hearing the learned Advocates also rebutted the reply/comments of the Chennai Customs House by reiterating their arguments already submitted in the application. Further, learned advocates present for the applicant have submitted rebuttal dated 08.01.2024 and 11.01.2024 to the comments of Chenn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll 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 submitted that their product does not fall in the above chapters and accordingly, the classification HSN 5903 does not apply to it. The applicant has further submitted that the satin rolls are not coated with polyamide or any polymeric material. In the present case, the rolls proposed to be imported by the applicant are not coated with polyamide or any polymeric material. The fabric undergoes a process like fabric washing by aqua hydrogen dioxide liquid caustic, dyeing, fluorescent bleacher, high pressure calendaring or by coating which enable printing on them. The said processes/coating on the fabric facilitates printing on the fabric, which is later stitched to the products and coated/processed side of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... une 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 aspect to decide the case on merit. Further, the said advocates have rebutted the comments of the jurisdiction Chennai Customs House thoroughly. Case laws cited by the learned advocated have been perused by me and I have understood their relevance in the instant case. 6.2. Chapter heading 58.06 covers Narrow woven fabrics, other than goods of heading 58.07; narrow/fabrics consisting of warp without weft assembled by means of an adhesive (bolducs). 5806 10 00 - Woven pile fabrics (including terry towelling and similar terry fabrics) and chenille fabrics 5806 20 00 - Other woven fabrics, containing by weight 5% or more ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bossed, 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 10 10 Of cotton 5807 10 20 Of man-made fibre 5807 10 90 Other 5807 90 - Other As per HSN Explanatory notes to CTH 58.07, subject to the conditions specified below, this heading covers: (A) Labels of any textile material (including knitted). These include labels of a kind used for marking wearing apparel, ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 the HSN explanatory notes the proposed imports will get covered under exclusion clause of CTH 5806. In the instant case the goods will be imported without printing of labels on them. Applicant has argued that the textiles labels printed or otherwise are classifiable under HSN 5807 10. It is submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 identified by the section of people dealing in or using the same would be known as Label due to its functional character. Further, due to the exclusion clause the said label or similar articles in strip would not be covered under heading 58.06. 6.6. Further, labels, badges a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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