1992 (8) TMI 182 - AT - Customs

Tribunal excludes EVA unit soles under ITC Policy but denies exemption under Notification.

The Tribunal held that the imported EVA unit soles were excluded under Item 473 of Appendix 3 Part A of the ITC Policy, supporting the respondents' claim. ... Import control Issues Involved:1. Whether the imported EVA unit soles were excluded under Item 473 of Appendix 3 Part A of the ITC Policy.2. Whether the imported EVA unit soles qualify for exemption under Notification No. 49/86-C.E., dated 12-2-1986.Detailed Analysis:1. Exclusion Under Item 473 of Appendix 3 Part A of the ITC Policy:The respondents imported 21,000 EVA unit soles for chappals under OGL Appendix 6(1) of the ITC Policy, 1985-88, and claimed exemption under Notification 49/86 for countervailing duty. The Dy. Collector denied the import under OGL, citing the amendment in ITC Policy No. 130/13/11/86, which included 'all other unit soles' under Item 473 of Appendix 3 Part A. The respondents argued that the amendment did not affect plastic unit soles, supported by a clarification from the Ministry of Commerce, stating that plastic unit soles remain under OGL.The Tribunal noted that Item 473 before the amendment excluded all unit soles, irrespective of the material. The amendment specifically added 'cut soles from leather' to the exclusion. The Tribunal concluded that the intention was to exclude unit soles of all materials and cut soles of leather only. The clarification from the Chief Controller of Imports & Exports, which stated that the goods could be imported under OGL, was deemed binding on the customs authorities. Therefore, the Tribunal held that the goods were excluded under Item 473 Appendix 3 Part A, supporting the respondents' claim.2. Exemption Under Notification No. 49/86-C.E., dated 12-2-1986:The notification exempts 'soles specially made and clearly recognisable as being designed for sponge rubber chappals.' The Department argued that EVA soles, made of plastic, cannot be treated as designed for sponge rubber chappals. The Tribunal examined the definitions and common parlance understanding of 'sponge rubber' and 'synthetic rubber.' It was found that while technically distinct, synthetic rubber, including EVA, was understood in trade as sponge rubber. Thus, the Tribunal initially held that the respondents were entitled to the exemption.However, there was a dissenting opinion. One member argued that the exemption should be strictly interpreted, and since EVA is a plastic material, it does not qualify as sponge rubber. The dissenting member emphasized that the exemption notification's plain meaning should prevail, excluding plastic soles from the exemption.The matter was referred to a third member, who concurred with the dissenting opinion. The third member highlighted that the notification's wording and the technical distinction between sponge rubber and EVA necessitated a strict interpretation. Consequently, it was concluded that EVA unit soles do not qualify for the exemption under Notification No. 49/86.Final Order:In light of the majority opinion, the Tribunal held that EVA unit soles do not qualify for exemption under Notification No. 49/86. The Department's appeal was partly allowed.