Classification of micro cellular rubber goods and exemption for end-use in footwear manufacture upheld on invoice and affidavit evidence.

Contemporaneous tax invoices were treated as the primary evidence for classifying the goods, and they supported classification as Micro Cellular Rubber Blocks rather than Micro Cellular Rubber Sheets; the Revenue's reliance on VAT and transport documents was found insufficient to displace that evidence. Even on the alternate view that the goods were sheets, the exemption for Micro Cellular Rubber sheets used in making soles, heels, or combined soles and heels was held available because customer affidavits showed the required end use and the Revenue produced no rebuttal evidence. On that basis, the demand, penalty, and confiscation could not be sustained.

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Issues: (i) Whether the goods manufactured and cleared by the assessee were classifiable as Micro Cellular Rubber Blocks under Heading 4008 19 10 or as Micro Cellular Rubber Sheets under Heading 4008 11 10; (ii) whether, even if the goods were treated as sheets, exemption under Notification No. 3/2005-CX dated 24/02/2005 was available.

Issue (i): Whether the goods manufactured and cleared by the assessee were classifiable as Micro Cellular Rubber Blocks under Heading 4008 19 10 or as Micro Cellular Rubber Sheets under Heading 4008 11 10.

Analysis: The tax invoices issued by the manufacturer described the goods as blocks and showed them as soles of the relevant size. Those invoices were treated as the primary contemporaneous evidence of the nature of the goods. The Revenue relied mainly on VAT and transport documents describing the goods as sheets, but those descriptions were not found to outweigh the manufacturer's invoices, especially when the assessee explained the description used for VAT purposes and produced customer affidavits supporting the character of the goods as blocks.

Conclusion: The goods were held to be blocks and not sheets, and the Revenue's contrary classification was rejected.

Issue (ii): Whether, even if the goods were treated as sheets, exemption under Notification No. 3/2005-CX dated 24/02/2005 was available.

Analysis: The notification granted nil duty to Micro Cellular Rubber sheets used in the manufacture of soles, heels, or soles and heels combined for footwear. The assessee produced customer affidavits showing such use, and the Revenue did not produce any contrary evidence to disprove that end use. The absence of rebuttal evidence meant that the condition attached to the exemption stood satisfied.

Conclusion: The exemption was available even on the Revenue's alternate classification.

Final Conclusion: The demand, penalty, and confiscation could not be sustained, and the assessee succeeded in full.

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