There is thread on EU forum about cloth chest never dropping on personal loot.
I checked also my guild and nobody ever got it. I did quite some heroics and also never got it on personal loot.
Last night I was in guild premade and we turned on Need before Greed on 2nd boss in Shadowmoon Burial Grounds since he have cloth chest in loot table.
And it dropped for me and to make it even better - it was one with socket in it - http://www.wowhead.com/item=109899&bonus=523:524