TaxTMI 
TaxTMI 
1996 (4) TMI 228
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....on one side. 1.5. Representative samples drawn from the consignment 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. ....
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....e said goods) specified in column (2) of the Table hereto annexed and falling within the First Schedule to the Customs Tariff Act, 1975 ........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. ....
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....alled a heel piece or half-insole." 5.2 Learned Advocate further submits that this very product imported in Madras Customs House, came up for adjudication by the Collector of Customs, Madras. The said Collector in a detailed Order-in-Original No. 65/95, 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....
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....ffect to the foot during the wear of footwear. The PU coated fabric is a substitute material, made to look like genuine leather and it is, now, widely used in the footwear industry for various comparative advantages. As stated by the party, the insole itself 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....
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....lectors' Conference held in September, 1989, where at, the then Notification No. 224/85 and the present Notification No. 45/94 together came up for discussion. After detailed discussions, it was finally held that the import of goods `for use in the leather industry' 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 Co....
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....nto making of insoles. These, therefore, cannot be treated as consumer goods as rightly held by the Collector of Customs, Madras. In this connection, he again relies on the following findings of Collector of Customs, Madras :- As regards the aspect of the "consumer goods", in the show 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 fi....
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....ll as by the other importers as an item qualifying for import under OGL as per para 22 of the Policy. The Custom House, Madras as well as other Custom Houses have, all along, been allowing the clearance of the subject goods without a licence. In this regard, it is relevant to refer to the 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.....
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....t the expression `insole' used in Entry No. 3 of list A of the Table to Notification No. 45/94 would also cover within it `loose insole' as such. Elaborating the argument further learned JDR draws attention to the meaning of the expression `loose insole' already extracted above and submits that here again `loose insole' 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 ....
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....nation of DRI for the purpose of reviewing the same in terms of Section 129D of the Customs Act, 1962. 11. In rejoinder, learned Advocate, Shri G.L. Rawal, has submitted that the judgment of the Supreme Court regarding maintenance of a non-perverse finding by appellate authority, is applicable to a second appeal and not to the first appeal. In the present 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 aris....
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....eady considered by the Collector of Customs, Madras and which, as submitted has already become final. It is, therefore, submitted that the benefit of Notification No. 45/94 be extended to the goods in question. 11.4 On the next plea whether the goods are `consumer goods', learned Advocate for the appellants has again drawn attention to the various findings of the Collector of Customs, 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 "sh....
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....I.S.I. Glossary of Terms relating to footwear industry in I.S. 2050 1991 also supports the appellants as rightly pointed out by the learned Advocates. The expressions `loose insole' and `insole' have been used in order to describe the expression `insole' so as to bring out the distinction between two types of insoles - loose or fixed. But it does not detract from the meaning that loose insole or removable 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 co....