The appellant, M/s. Sadguru Seva Paridhan Pvt. Ltd. manufactured a fusible interlining cloth. Before 1989, the item used to be classified under Chapters 52 to 55, as clarified under Circular No. 5/89 dated 15/06/1989.
In the Union Budget of 1989-90, a new chapter note 2(c) was introduced in Chapter 59 of the Tariff, which led to the inclusion of textile fabrics, partially or discretely coated with plastic by dot printing process under heading 5903.
Subsequently, in the Union Budget of 1995, the said chapter note 2(c) was omitted with effect from March 16, 1995. It is the claim of the appellant that after removal of the said chapter note, the item cannot be classified under Heading 5903.
The sample copies of invoices issued by the appellant indicate that it is classifying the product under sub-heading 5208.
The applicant contended that the West Bengal AAR ignored the judgment in the case of Goodwear Fashion Pvt. Ltd. wherein similar facts and circumstances, the WBAAR of Uttarakhand held that such fabrics would fall under Chapter 52 or 55, 58 or 60 of the Tariff Act and not Heading 5903.
The contention of the respondents is that the product merits classification under sub-heading 5903. Sub-heading 5903 contains products namely textile fabrics, impregnated, coated, covered, or laminated with plastics, other than those of heading 5902. Chapter note 2 of chapter 59 of the Tariff provides the description of products that should come under sub-heading 5903.
The AAAR observed that the claim of the appellant’s advocate does not hold good and the exclusion clause (4) of chapter note 2(a) of Chapter 59, which is essential for being excluded from Chapter 59 is not applicable to fusible interlining cloth manufactured by the appellant. So, it is clear that the subject product merits classification under sub-heading 5903 of the Tariff.
The Appellate Authority consisting of members Devi Prasad Karanam and A.P.S. Suri while upholding the ruling of AAR said that fusible interlining cloth is not a woven fabric and falls under HSN 5903, so 12% Goods and Service Tax (GST) is applicable.