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Interesting Ruling : Salwar / Churidhar sets, comprising of three pieces of cloths is to be classified as “Fabrics” or “articles of apparel and made up”?
2019 (8) TMI 1356 – APPELLATE AUTHORITY FOR ADVANCE RULING, TAMILNADU
IN RE: M/S. RMKV FABRICS PRIVATE LIMITED
Classification of goods – Salwar / Churidhar sets, comprising of three pieces of cloths viz., tops, Bottom and Dupatta, whether partially stitched/ neck work done, or not – whether they are to be classified as “Fabrics” under Chapters 50 to 55 depending on the constituent material or as “articles of apparel and made up textile articles” under Chapter 61,62 and 63? – rate of GST – challenge to AAR decision.
HELD THAT:- It is agreed that in the sets under consideration, the Salwar (bottom) requires stitching and the Kurta(Top) is to be stitched to size but mere Stitching / Stitching to size do not take away the characteristics of the garments being Salwar/ Churidar sets. It will not be out of context to mention that in the Model 2 and 3 displayed during the hearing, it was observed that the duppatta which is one of the pieces in the Set is hemmed/ knotted and in a ready to wear condition. The sets can be used only as ‘Churidars’ and cannot be used as any other garments or termed as ‘fabrics’ – Therefore the sets which are in approximate shape/outline of the finished goods, more so with one piece in ready to wear condition, have the essential character of ‘finished goods’ and in view of interpretative Rule 2(a) are classified as ‘Kurta and Salwar with or without dupatta’ under CTH 6211.
The second contention of the appellant is that once the trade raised the doubt, that, in trade parlance, these goods are supplied as “fabric”, which is subject to stitching according to the size/ shape and designs of the end user and therefore it cannot be termed as ready-made garments and only called as “Churidar materials” – HELD THAT:- The clarifications were issued that “unstitched salwar suits’ are classifiable as “fabrics” and attract 5% GST.
It is seen that CBIC vide Circular No. 13/2017 dated 27.10.2017 has clarified that ‘Mere cutting and packing of fabrics into pieces of different lengths from bundles or thans, will not change the nature of these goods and such pieces of fabrics would continue to be classifiable under the respective heading as the fabric and attract the 5% GST.
Thus, to be a garment/ made up, the product has to be more than mere fabric – In the case at hand it is already established that the products are incomplete or unfinished ‘Salwar/Churidar Sets’, which requires further stitching to size/design. The products are not simply fabrics with certain embellishments but containing Top which are Semi-stitched, Stitched and neck-line formed/ dupatta hemmed/ knotted, which are without ambiguity cannot be considered as mere ‘Fabrics’ but more appropriately termed as ‘garments’ or ‘Part of garments’ – Thus the Model 2, 3 and 4 under consideration, being Sets of three pieces consisting of (1) unstitched Salwar(bottom), (2) laced/ hemmed/ knotted duppata and (3) Semi-stitched / Fully stitched Kurta(Top)/ Top with defined neckline are ‘garments’ and not mere ‘fabric’ in three pieces. These are covered under specific entry in the Customs Tariff- CTH 6211, as the heading includes ‘Salwars’ of various materials.
Rate of tax – HELD THAT:- As per Notification No. 01/2017-C.T.(Rate) dated 28.06.2017 as amended and Schedule I of Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017 of Tamil Nadu Government as amended, the subject goods are liable to GST @ 5%[CGST-25% and SGST-2.5%], if the sale Value is less than ₹ 1000/- per piece and @ 12% [CGST 6% and SGST-6%], if the sale value is more than ₹ 1000/- per piece.
The decision of Advance ruling Authority upheld.
No.- Order in Appeal No. TN/AAAR/03/2019 (AR)
Dated.- May 13, 2019
In Re: M/s. RmKV Fabrics Private Limited – 2019 (3) TMI 923 – AUTHORITY FOR ADVANCE RULING, TAMILNADU