GST Classification of Polyolefin Non-Woven Fabrics Under CETH 5603
India’s textile industry often faces GST disputes over tariff classification, especially for non-woven fabrics. A recent CESTAT decision has brought much-needed clarity on polyolefin-based non-woven fabrics, confirming their classification under CETH 5603.
This blog simplifies the ruling and its GST impact for importers, textile manufacturers, and consultants.
What Are Polyolefin-Based Non-Woven Fabrics?
- Made from synthetic polymers like polypropylene or polyethylene
- Used in hygiene products, packaging, medical textiles
- Manufactured without weaving/knitting — bonded mechanically or chemically
What Was the GST Dispute?
Many importers classified these under generic headings like CETH 5603 or 6307, leading to:
- Confusion in tax rate applicability
- Notices from customs authorities
- Delay in IGST refunds on imports
CESTAT Ruling Highlights:
✅ Case: In Re: H&H Trading Company
✅ Forum: Customs, Excise and Service Tax Appellate Tribunal (CESTAT)
✅ Issue: Whether polyolefin non-woven fabrics are classifiable under CETH 5603
✅ Verdict: Yes — based on:
- Chemical test reports
- Fiber composition
- Consistency with Chapter Notes of Heading 56
Why CETH 5603 Matters
| Feature | CETH 5603 | Other Common Misclassifications |
|---|---|---|
| Product Type | Non-woven fabrics | Finished goods like bags, masks |
| HSN Base | Chapter 56 – Wadding & non-wovens | Chapter 63 – Other textile articles |
| IGST Rate (Import) | 5% / 12% depending on use | Higher rates if misclassified |
| Refund Eligibility | Valid input tax credit | Refund rejections if misclassified |
CBIC & Tariff Rules – Key References
- CBIC Tariff Notifications: Schedule I & II (based on usage and GSM)
- Harmonized System of Nomenclature (HSN): Defines 5603 as non-wovens, whether impregnated or not
- Chapter Notes to Chapter 56: Crucial for identifying fabric vs. final products
🔗 CBIC Tariff Notifications – Official
Expert Tip:
When importing or manufacturing such fabrics, always preserve lab test reports and fiber content details. This can be decisive during classification disputes or refund claims.
Compliance Takeaways for Importers
- Classify raw non-woven fabrics under CETH 5603
- Avoid CETH 6307 unless the fabric is converted into finished goods
- Keep technical literature and invoices ready during assessments
- Claim IGST refunds only after aligning with correct HSN
FAQ: GST on Non-Woven Fabrics
Q1. What is the GST rate under CETH 5603?
Depends on use – generally 5% or 12%, check specific notifications.
Q2. Can I use 5603 for finished products like PPE kits?
No. Finished goods have different HSN codes like 6307 or 6210.
Q3. How can I challenge a wrong classification notice?
File reply with lab reports, import documents, and request for personal hearing.
Smmary
CESTAT confirms non-woven fabrics made of polyolefin fibers fall under CETH 5603. Importers must align GST classification based on fiber tests and CBIC guidelines to avoid disputes and claim refunds accurately.
Conclusion
Correct GST classification under CETH 5603 can save businesses from legal hurdles and refund issues. At Efiletax, we help importers and manufacturers navigate tariff codes, draft replies, and stay GST compliant.