Textile Label Rolls Classifiable Under CTH 58071020, Not CTH 58071090: CAAR Mumbai Ruling in Gauge International LLP

Background and Context

The Customs Authority for Advance Rulings (CAAR), Mumbai recently examined a significant classification question concerning rolls of textile material manufactured from man-made fibres and intended exclusively for use as garment labels. The applicant, M/s Gauge International LLP (IEC No.: ABEFG3056B), a Bengaluru-based entity registered under GST vide registration number 29ABEFG3056B1Z0, filed an application in Form CAAR-1 before the CAAR, Mumbai under Section 28H(1) of the Customs Act, 1962 on 03.06.2026, seeking an advance ruling on the classification of 16 varieties of label tape rolls proposed to be imported through the ports of Chennai and Bangalore.

The core question before the Authority was whether these textile label rolls were appropriately classifiable under CTH 58071090 (as urged by the applicant) or under CTH 58071020 (as maintained by the jurisdictional Commissionerate), and what IGST rate would consequently apply.

Products Under Consideration

The applicant proposed to import 16 distinct varieties of label tape rolls, each available in widths of 10, 12, 19, 25, 28, 30, 32, 35, 40, 45, 51, 64, 76, 102, 204, and 300 mm. The complete range of products covered under the application is as follows:

All products were declared to be composed of man-made fibre woven textile fabrics, were non-embroidered, and were specifically designed to bear printed information such as trademarks, wash-care instructions, country of origin, size, and brand details once attached to garments.

Applicant's Position and Legal Arguments

Classification Sought: CTH 58071090

The applicant contended that all 16 product variants merited classification under CTH 58071090, being textile labels that did not fall under the cotton sub-heading (CTH 58071010) or the man-made fibre sub-heading (CTH 58071020). Several grounds were urged in support:

1. Trade and Common Parlance Test

The applicant relied on well-established judicial precedent holding that where a tariff expression is not statutorily defined, goods must be classified as understood in trade and commercial parlance. In support, the following decisions were cited:

• The Bombay High Court in M/s. Pleasurise Chemicals – 1997 (95) E.L.T. 203 (Bom.) observed:

"Where no definition is provided in the statute for ascertaining the correct meaning of a fiscal entry, the same should be construed as understood in common parlance or trade or commercial parlance."

• The Supreme Court in Dunlop India Ltd. & Madras Rubber Factory Ltd. – 1983 (13) E.L.T. 1566 (S.C.) held:

"It is clear that meanings given to articles in a fiscal statute must be as people in trade and commerce, conversant with the subject, generally treat and understand them in the usual course."

• The Bombay High Court in M/s. Kantilal Nanchand and Co. – 2000 (123) E.L.T. 371 (Bom.) reiterated:

"When an expression is not defined in a Statute, the meaning to be given to it is the one which it has in popular or trade parlance."

• The Karnataka High Court in M/s. Bella Premier Happy Hygiene Care Pvt. Ltd. – 2018 (17) G.S.T.L. 608 (Kar.) observed:

"If a commodity can by more rational understanding or analysis be brought or related to specific entry in the tax laws, the same cannot be taxed under the residuary entry and what is important to apply the Trade Parlance Test or Common Parlance Test."

The applicant submitted that in trade, these products are universally known and sold as "labels," including by the supplier M/s. Zhejiang King Label Technology Co. Ltd., whose very name reflected the trade character of the goods.

2. Functional Test

Relying on the Supreme Court's ruling in Atul Glass Industries Ltd. v. Union of India – 1986 (25) E.L.T. 473 (S.C.), the applicant argued that classification may appropriately be based on the function a product performs. The Supreme Court in that case observed:

"It is generally by its functional character that a product is so identified… When a consumer buys an article, he buys it because it performs a specific function for him."