End-use exemption for footwear machinery applies where the machine is designed for leather footwear manufacturing despite dual-use capability.

Exemption under Notification No. 42/78-Cus. for Chapter 84 machinery turned on whether the imported PVC direct injection soling machine was designed for use in the leather footwear manufacturing industry. The functional test applied was the machine's intended and actual use in producing PVC soles and attaching them directly to leather uppers to make leather footwear. That the machine could also produce plastic soles did not defeat eligibility, because dual use did not negate its design for the specified leather industry. On that end-use basis, the machine qualified for concessional duty exemption.

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Issues: Whether the imported PVC direct injection soling machine was entitled to concessional duty exemption under Notification No. 42/78-Cus. as a machine designed for use in the leather footwear manufacturing industry.

Analysis: The exemption applied to goods falling under Chapter 84 of the First Schedule to the Customs Tariff Act, 1975, if they were designed for use in specified leather industries, including leather footwear manufacturing. The machine imported by the appellant was shown to produce PVC soles and to attach them directly to leather uppers, resulting in leather footwear. On that functional use, the machine satisfied the condition of being designed for use in the leather footwear manufacturing industry, and the fact that it also produced plastic soles did not defeat the exemption.

Conclusion: The machine was eligible for exemption under Notification No. 42/78-Cus., and the issue was decided in favour of the assessee.

Ratio Decidendi: For exemption under an end-use based notification, the decisive test is whether the imported machine is designed for use in the specified industry, and a machine used to produce and attach soles directly to leather uppers qualifies as machinery designed for use in leather footwear manufacturing.

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