PVC Raincoats Classifiable under 'Overcoats, Raincoats, and Similar Articles' of First Schedule in Customs Tariff Act: Customs AAR

The Mumbai bench of the Customs Authority for Advance Ruling (AAR) ruled that the PVC raincoats are classifiable under the category of "Overcoats, Raincoats, and Similar Articles" as specified in the First Schedule of the Customs Tariff Act, 1975.

M/s. NZ Seasonal Wear Private Limited the applicant filed an application (CAAR-1) for advance ruling before the Customs Authority for Advance Rulings, Mumbai (CAAR). The said application was received in the secretariat of the CAAR, Mumbai on 10.04.2023 along with its enclosures in terms of Section 28H (1) of the Customs Act, 1962 (hereinafter referred to as the 'Act' also). The applicant is seeking advance ruling on the classification of 'PVC raincoats' for exports through the port of Nhava Sheva

That the Applicant is, inter alia, engaged in the business of manufacturing and sale of seasonal wear products (i.e. rainwear and winter wear). The Applicant is manufacturing and distributing Coated Fabric Raincoats and PVC Raincoats. Now the Applicant wants to export PVC raincoats. A PVC raincoat is a waterproof outer jacket made from polyvinyl chloride (PVC). The slick, non-permeable surface of PVC makes it a popular material for raincoats.

The product, is inter alia, made from huge PVC rolls/sheets. The said PVC rolls undergoes panel cutting process (i.e. the huge rolls/ sheets are cut into smaller sheets for front & back portion, sleeves, pockets, etc.). The said small PVC sheets are generally not stitched with a needle and thread. Since PVC is nonporous, a needle would leave a large hole that would allow water to enter, making for a very ineffective raincoat, and weakening the seam. Instead, PVC seams are generally "welded" with heat, or bonded by chemical means. Either way, the all pieces of materials are melted together, either thermally or chemically, and are permanently bound.

Thus, it is a non-woven product. Once all the materials are permanently bound the stitching of the front zipper (made from polyester tape plastic teeth), draw cord (made from polyester), button (made from plastic or metal) or stopper (made from plastic) is carried out. The finished product is then sent to the packing machine for packing and the final product is ready to be transferred to the warehouse for dispatching the same to various distributors, retailers, wholesaler, etc.

The applicant submitted that in the instant case, PVC raincoats are made of PVC material. PVC material normally consists of strong synthetic plastic polymers. Thus, on the con- joint reading of the above provisions and the characteristics of the product, it is safe to infer that raincoat is made of textile material. Once it is so, it would fall out of Chapter 39 of the Tariff. Leading to chapter heading 6201 of the Tariff. It is well settled that the HSN Explanatory Notes are a safe guide to understand the meaning of the terms and classification under the Customs Tariff Act

Further submitted that thus, on plain perusal of the above HSN Explanatory notes, it is evident that overcoats, raincoats, windcheaters, wind jackets and similar articles which are used for protection against weather would be classified under chapter 62.01. Therefore, even going by the HSN Explanatory notes, the subject product would be classifiable under chapter heading 6201.

Chapter heading 6201 specifically covers raincoats. It is well settled that specific heading would prevail over general. Even in terms of Rule 3(a) of the General Rules of Interpretation of the Customs Tariff Act, 1975, the heading which provides the most specific description shall be preferred to headings providing a more general description. This view has been endorsed by the Apex Court in the case of Commercial Tax Officer V. Binani Cement Limited reported in 2014 (3) SCR 1.

The bench found that the goods included the submissions made by the applicant during the course of personal hearing. I therefore proceed to decide the present applications regarding classification of "PVC raincoats" on the basis of the information on record as well as the existing legal framework having bearing on the classification of the products in question under the first schedule of the Customs Tariff Act, 1975.

Heading 6201 covers Men's or boys' overcoats, car-coats, capes, cloaks, anoraks (including ski-jackets), wind-cheaters, wind-jackets and similar articles, other than those of heading 6203. Heading 6203 covers Men's or boys' suits, ensembles, jackets, blazers, trousers, bib and brace overalls, breeches and shorts (other than swimwear). Plain reading of these two headings makes it clear that heading 6201 is the most suitable heading to cover raincoat, moreover, CTI 6201 4010 specifically covers--- Overcoats, raincoats, car-coats, capes, cloaks and similar articles (of man-made fibers)

On the basis of foregoing discussions and findings, the single member bench of the tribunal comprising V.M Shobhan Sindhu (Asst. Commissioner of Customs and Secretary Customs Authority for Advance Ruling) ruled that the subject 'PVC raincoats' merit classification under CTH 6201 and more specifically under CTI 6201 4010 of the first schedule of the Customs Tariff Act, 1975

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