TMI Blog1996 (4) TMI 228X X X X Extracts X X X X X X X X Extracts X X X X ..... were sent to the Council for Leather Export, Calcutta (CLE), to the Central Leather Research Institute (CLRI), Calcutta, for testing and examination and technical opinion. Both the organisations as alleged by the Department, opined that the samples are coated fabric and these can neither be treated as insole or midsole for leather industry. 2. A Show Cause Notice was, therefore, issued to the appellants to show cause as to why (i) the subject goods be not confiscated under Section 111 (d) and 111(m) of the Customs Act, (ii) the benefit of Notification No. 45/94-Cus. be not denied to the goods; and (iii) the penalty be not imposed on them under Section 112(a) of the Customs Act, 1962. 2.1. On adjudication, the Collector of Customs, setting aside the various pleas of the appellants confiscated the goods and imposed a fine in lieu of confiscation to the tune of Rs. 12 lakhs on the first appellants, Rs. 5,25,000/- in respect of one consignment and Rs. 12 lakhs in respect of another consignment of the second appellants. He also imposed the penalty of Rs. 1.2 lakhs on the first appellants and Rs. 50,000 and Rs. 1.2 lakhs in respect of the two consignments of the second appellants. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ........imported into India for use in the leather industry from so much of the duty of Customs leviable thereon which is specified in the said First Schedule as in excess of 20%, ad valorem and the whole of the additional duty leviable thereon under Section 3 of the said Customs Tariff Act : Provided that in the case of the said goods, listed under heading B, the importer, at the time of importation, furnishes an undertaking to the Assistant Collector of Customs, to the effect that - the said imported goods shall be used for the purpose of (a) specified above. ............................ (b) TABLE S. No. Description of goods (1) (2) A. COMPONENTS, CONSUMABLES AND OTHER ITEMS :- _____________________ 1. ____________________ 2. Insoles or midsoles and sheets therefor 3. ____________________ 4. ____________________ 5. Cellulose Board insole sheets. 25. ____________________ 26. ___________________ 27. ____________________ 43. OTHER COMPONENTS, CONSUMABLES AND ITEMS :- B. ________________ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /95, dated 28-2-1995, has held that the benefit of Serial No. 3 in the Table to Notification No. 45/94 is applicable to the goods in question. His findings are reproduced below which have been adopted by the learned Advocates for the appellants :- The party submitted that the subject goods are PU coated fabrics or PU leather cloth as known in the trade, the same have been imported as sheets in roll. The said goods are capable of use as insoles in the leather footwear industry. As stated by the party, the word insole finds place in the Notification which provides for concessional rate of duty for specified goods imported for use in the leather industry. The one entry is at Sl. No. 3 which uses the expression insoles, midsoles and sheets thereof and the other Entry at Sl. No. 25 which uses the expression cellulose board insole sheets. It is, therefore, relevant to note that the Entry No. 3 is the general entry covering various categories of insoles, whereas, the Entry No. 25 is a specific entry dealing with cellulose board when used as an insole. Similar entries were not appearing in the earlier Notification No. 224/85, whereas, the present Notification No. 45/94 contains these t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lf is a synonyms with the expression socks . The expression `sock has been recognised and defined as removable inner sole worn in a shoe. The Concise Oxford Dictionary also defines sock as removable inner shoe sole. When viewed from this angle, the Certificate given by the Central Footwear Training Centre to the effect the subject goods can be used for socks and insole covering are in fact in favour of the importer which itself indicate the subject goods are capable of use as insoles. Similarly, the report of the Export Inspection Agency, Madras to the effect that the subject goods can be used for insole covering shoe sock (technical term) land as upper for ladies and gents slippers/sandals also indicate that the subject goods are capable of use as insoles in the leather footwear Industry. Further, I find, when the samples were sent to C.L.R.I., Calcutta for report, the said authority certificated that the goods can be used as insoles (insock) lining material to footwear manufacture. Further, the Leather Footwear Department, Ministry of Industry, Government of India, Agra, have also certified that the PU leather cloth is used in the manufacture of leather footwear as insoles an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustry did not mean that the said goods should actually be used in leather industry. The reasoning was that no end-use condition or bond procedure was prescribed for the said goods in the Notification. Accordingly, if the goods are capable of being used, the benefit of Notification ought to be given. In the light of the above, a tariff advice was also directed to be issued. I find the above decision of the Collectors Conference, is in line with a series of judicial pronouncements given by the Supreme Court, various High Courts as well as the Tribunals on the question of end use. Even the Supreme Court, in the case of M/s. Dunlop India Ltd., reported, in 1983 (13) E.L.T. 1566, held that while deciding on the classification of the item, its actual use or possible other uses are not relevant, but, only its capability of use at the time of the taxing event is relevant. The aforesaid view has also been reiterated by the Supreme Court in the case of M/s. Porrits Spencers (Asia) Ltd., reported in 1983 (13) E.L.T. 1607. Further, the Tribunal, in the case of M/s. Vipul Shipyard, reported in 1985 (19) E.L.T. 122, have specifically ruled that while construing the entry in a particular Noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow cause notice, it is alleged that the subject goods, appear to be consumer goods in terms of para 156(4) of the Import Export Policy, 1992-97, consequently, the goods are not importable under OGL, under para 22 of the Policy, thereby, a specific import licence was required, since the subject goods are imported without a licence, they are liable to confiscation. In terms of para 156(4) of the Import Policy, the consumer goods mean the goods which are capable of directly satisfying human needs without any further processing. In the present case, I find the show cause notice itself proceeds on the presumption that the subject goods are capable of use as raw material in upholstery. In other words, the subject goods can be put to use as sofa covers (upholstery) which use by its very implication requires the material to undergo various operations/processes such as cutting, moulding, stitching, etc. I find, the Tribunal in the case of M/s. Ashish Co., reported in 1986 (25) E.L.T. 114, held that the PU coated fabric (PU leather cloth) is in itself raw material for the manufacture of footwear. Further, in the case of M/s. Mangala Bros., reported in 1984 (15) E.L.T. 151, the Tribunal r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he pronouncement of High Court of Calcutta in the case of M/s. Sandeep Aggarwal, reported in 1992 (62) E.L.T. 528, wherein their Lordships observed that the quasi-judicial authorities ought not to ignore the precedents, lest it would lead to utter confusion in the basis and the principle in taxation and it would also result in unfair discrimination in respect of same goods which is not permissible under the fundamental Right of Equality guaranteed by the Constitution. In view of the above, I hold the subject goods declared as material for footwear insole by the party and alleged to be material for `sofa covers (upholstery)" by the Department, and imported in the form of rolls are not the consumer goods , requiring any licence, accordingly, they are not liable to confiscation under Section 111(d) of the Customs Act, 1962, read with Section 3(2) of Foreign Trade (Development Regulation) Act, 1992. 7. He, therefore, prays for allowing the appeal of the first appellant. 8. Learned Advocate, Shri Sunil Chatterjee, for the second appellants adopt the arguments of the learned Advocate for the first appellants and prays for allowing the appeal. 9. Learned JDR, Shri S.N. Ghosh, f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ole has been considered to be different from the insole inasmuch as it defines `loose insole as a piece of skin, fabrics or any other materials, cut to the shape of the insole land stuck to this to give a better appearance to the Footwear. 9.3 He, therefore, submits that when the Notification No. 45/94 gives the benefit inter alia to insole or sheets therefor, its meaning should be confined only to insole as known to the trade. It can not be extended to the expression `loose insole which is definitely distinct from `insole . 9.4 He, further, submits that it is now the settled proposition of law, that if there is any ambiguity in an expression used in an exemption Notification, the benefit should go to the Revenue as have been held by the Hon ble Supreme Court judgment in the case of Liberty Oil Mills reported in 1995 (75) E.L.T. 13 (S.C.). 9.5 He, further, submits that in view of foregoing controversy regarding the correct meaning of the expression `insole used in Notification No. 45/94, if the adjudicating authority has taken a view which is not perverse the same should not be disturbed by the appellate authority. This is the view taken in the case of C.D. George v. Assi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, he submits that the present appeal before the Tribunal, is first appeal against the Order-in-Original. Therefore, the said judgment relied upon by the learned JDR, does not apply. 11.1 Regarding the plea of the learned JDR, that meanings under the I.S.I. Glossary given to the expression `insole and `loose insole imply that the two expressions are differently known to the trade, he submits that it is not borne out by the correct reading of the meaning given in the Glossary. In this connection, he invites attention to part (b) of the definition of `insole which speaks of the soling on which the foot rests either directly or separated by a loose insole. He submits that the material in question is normally used as uppermost insole in a chappal on which the foot rests directly. The question of loose insole arises only in case of closed shoes and not in the case of open Footwear as the chappals or sandals are. He, also points out that the expression `loose insole in the definition of `insole has been merely used for the purpose of describing the distinction between one type of insole and another type of insole which `loose insole is. In the context of the user of both `ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stoms, Madras which show that any processing undertaken on the goods takes them away from the category of `consumer goods . It is self evident that the goods imported are merely sheets for insole. Therefore, these goods have still to be processed after being into insole for use in leather Footwear. It cannot, therefore, be stated by any reasonable person that the goods are `consumer goods . Learned Advocate, Shri Sunil Chatterjee, on a specific plea relating to their goods taken by the learned JDR, to the effect that Bill of Lading in the first instance described the goods as `coated fabrics and latter on a slip has been pasted on it, describing the goods as `sheets for insole , submits that the goods can be described in both the manners. The goods are coated fabrics but they are also known as sheets for insole . No mala fide, therefore, can be treated in the purported action of the appellants. One description indicates broadly the constituent material and the process of manufacture of the goods and the other description indicates the user of the goods. 12. We have carefully considered the pleas advanced from both the sides. The following two questions are involved :- (1) w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... movable insole is also a variety of `insole . It is well settled that when a general term is used in Tariff or a Notification, its meaning as understood should not be curtailed unless the context otherwise requires. We have no good reason here to curtail the meaning of expression `insole as restricted to only `fixed insole as contended by the Department. It would, in our view, cover all types of insole whether fixed or loose or removable. Reliance regarding thickness, we agree with the learned advocate that it does not pertain to footwear in general. Viewed, in that light, the goods are entitled to the benefit of Notification No. 45/94 under serial No. 3, List A of the Table of the said Notification and we hold accordingly. 13. As regards the controversy whether the goods are consumer goods or non-consumer goods, we are of the view, speaking in a general sense, that this expression is used in a relative sense. The same goods may be consumer goods if purchased by an individual for his personal use as the example of the fabric given by the learned JDR. But that fabric may not be consumer goods if purchased by a garment manufacturer for the purpose of using it in manufacture a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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