Drawback - Classification of Tights or Leggings

PJ/Case Laws/2011-12/1508

Case: IN RE: MERIDIAN APPARELS LTD., CHENNAI

Citation: 2012 (275) E.L.T. 258 (G.O.I)

Issue:- Drawback - Whether Tights/Leggings classifiable under S.S.No. 611507 of Drawback Schedule irrespective of the Export garment being Unisex or not?

Brief Facts:- Applicant is manufactures-cum-exporters of garments. They had exported, girls Trouser (96% cotton and 4% Elasthane Knitted Girls Trouser) vide shipping bill nos 3400 dated 18-5-2009 and claimed Drawback rate at 8.80% of FOB by classifying under the drawback schedules SI.No. 6104. However the lower authority held the said goods as “legging” and classified the goods under DBK schedule 640699 and released drawback only @1.00% on the FOB value. Hence the applicant filled a set of letter dated 30-06-2009 on 1-07-2009 and 17-07-2009 on 05-08-2009 before the lower authority, seeking revision of classification to 61040101 and also filed supplementary claims for these two shipping bills. Against this, Lower Authority under the impugned order held that “96% Cotton & 4% Elasthane Knitted Girls Trouser as knitted Girls “Leggings” under heading 640699 of the DBK schedule for the purpose of granting Drawback. Being aggrieved by the said Order-In-Original, Applicant filed appeal before Commissioner (Appeals) who vide Order-In-Appeal under provision modified for T.S.H as SH No. 6112990 of TCH for classification and T.I.-611507 for Drawback Purpose. Being aggrieved by the Impugned Order-In-Appeal, The applicant has filed this Revision Application under Section 129DD of Customs Act, 1962 before Central government.

Applicant’s Contention:- The Applicant has filed this Revision Application under Section 129DD of Customs Act, 1962 before Central government on the following ground-

- Goods falling under Chapter 6115 are unisex: Chapter 6115 (Page 15-18) consists of Panty hose, tights, stockings, socks and other hosiery. HSN clarify that this heading covers the goods with-out distinction between those for women or girls and those for men or boys. (Page 41-42) This implies that the goods falling under Chapter 6115 are unisex. That is, these garments can be worn either by men or women or by boy or girl. For example goods like stockings, socks, tights, etc. can be worn both by men/women or boys/girls.

Whereas the "tight-fitting trousers" internationally called as "Leggings" will be worn only by ladies and not by Gents. In other words, when a garment is specific to a use of particular sex only, it cannot fall under Chapter 6115; since 6115 does not distinguish between men and women.

Further the HSN under Chapter 6115 states that panty hose or tights are designed to cover the feet and legs (hose) and the lower part of the body up to the waist (panty) (Page 43-44). The need to define "waist" as "waist (panty)" by HSN may probably mean that such tights are extended only up to the place where panties are generally worn up to hip or waist and not up to the place where panties are worn. Hence on this ground, the order passed by Commissioner (Appeals) deserves to be set aside. There is no dispute that what Appellant had exported are Girls' Trousers. It is clear that the Commissioner (Appeals) also holds this view in his Order in para 4-5 as follows : - (Page 19-40) "On observation of the samples sent by the lower authority, it is noticed that it is an elastic hipped tight trouser of size 156 cm/34 that would cover from waist to ankle, made of knitted fabric". Hence as per the observation made by the Commissioner (Appeals), it is beyond any dispute that what we had exported are "trousers" only. Once the goods are "Ladies trousers" it is appropriate to classify only under 6104 and not under 6115. From the above it is obvious that our export garments are "tight-trousers" only.

- The term "trouser" has been defined in HSN under Chapter 6103 in para (D) as :- (Page 47-48) "Trouser means garments which envelop each legs separately, covering the knees and usually reaching down to or below the ankles; these garments usually stop at the waist; the presence of braces does not cause these garments to lose the essential character of trousers." Further in para (F) in HSN it has been stated as :- (Page 49-50) "Shorts means "trousers" which do not cover the knee". This implies even shorts are construed to be trousers only. In other words, whether the trousers are fights or loose or shorts, still they are all called as "trousers" only. They further submit that the garments what we had exported is made out of fabric consisting 96% Cotton with 4% Elasthane. (Page 1-2 & 3-4) In this scenario, the order passed by the Commissioner (Appeals) that our goods fall under Chapter 6115 deserves to be set aside. There is no dispute in this issue before the original authority. When the garments consists 96% Cotton and 4% Elasthane, it must be categorised only under DBK Schedule 6104 01 01 as goods made out of "Cotton". In the recent Drawback Schedule announced by the Ministry of Finance under Circular No. 35/2010 dated 17th September, 2010, it has been clarified under Customs Notification 84/2010 dated 17th September, 2010 in para 13 of Notes and Conditions as: - (Page 51-56) "The garment or made-up of cotton or wool or man made fibre or silk or non silk shall mean that the content in it of the respective fibre is 85% or more by weight". The said circular clarifies when as item is to be classified as cotton or blend. If the content is 85% or more then such content will determine the drawback rates. Our goods are made out of 96% Cotton with 4% Elasthane. As cotton content is more than 85%, our goods are to be classified as goods made out of "Cotton" only. In this scenario, the order passed by the Commissioner (Appeals) classifying our goods 611507 incorrect. Hence on this ground also the order passed by the Commissioner (Appeals) deserves to be set aside.

Finally the applicant prayed for setting aside the order passed by the Commissioner (Appeals) and allow their goods under DBK schedule 6104 01 01.

Reasoning of Judgment:- Government noted that whatever the applicant Exporter is interpreting & explaining in all his above ground is all based on his basic assumption that whatever has been written/declared in the shipping bill is 100% correct therefore Central Government takes up this case matter with basic objection as being true and substantial i.e. whatever goods are exported were not conforming to normal trousers but were definitely of other particular category which the examining & exporting officer found as “leggings” but the Appellate Authorities inferred the same as tight-fitting stretchy single piece Knitted Garments more akin to ‘tights’ leggings eligible for DBK under S.S.No. 611507. The Applicant has not put forth any new ground in the Revision Application. Government notes the Commissioner (Appeal) herein has systematically examined each & every aspect of impugned export by calling for, not only all the records but also representative samples which was provided by the applicant and forwarded by the lower authorities. Government finds the above study of the Commissioner (Appeal) as detailed in para 4 (4.5 to 4.12) of impugned Order-In-Appeal are well reasoned and proper. Therefore Government is in full conformity with final view as concluded by the Commissioner (Appeal) that the good are rightly classifiable under DBK S.S.T. No. 611507- irrespective of the export garment being unisex or not. Government find no ground for interference in the same therefore they uphold the impugned Order-In-Appeal for being same as perfectly legal & proper. The Revision Application is thus rejected for being devoid of merits

Decision:- Application rejected.

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PJ/Case Laws/2011-12/1508

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