Trade parlance and HSN notes supported exemption for decorative fabric imports; misdeclaration allegation failed.

Imported goods declared as lace were tested as wrap knitted fabric, but the record showed they were used as decorative material in readymade garments for export. Trade parlance treated lace as a decorative open-work fabric, and the HSN explanatory notes also supported that understanding. Since the same goods had been imported since 2009 and had earlier been allowed the benefit of Notification No. 21/2002-Cus without objection, there was no basis to abruptly change classification or deny the exemption on a misdeclaration allegation. The exemption benefit was therefore allowed, and misdeclaration was not established.

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Issues: Whether the imported goods, though declared as lace, were eligible for the exemption under Notification No. 21/2002-Cus and whether denial of the benefit on the ground of misdeclaration was justified.

Analysis: The goods were tested and found to be wrap knitted fabric, but the record showed that they were used as decorative material in readymade garments for export. The finding below accepted that lace in trade parlance is a decorative open-work fabric and that the HSN explanatory notes also treat lace as a decorated fabric. It was further noted that the same goods had been imported since 2009 without objection and had been allowed the notification benefit earlier. In these circumstances, there was no basis to abruptly alter the classification or to deny the exemption on the allegation of misdeclaration.

Conclusion: The exemption benefit was rightly allowed and the allegation of misdeclaration was not made out.

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