2004 (1) TMI 526 - AT - Customs

Summary

Issues:
Whether polyester and cotton bags for musical instruments manufactured and exported are entitled to DEPB benefit under Product Group 89.

Analysis:
The dispute revolved around the eligibility of polyester and cotton bags for musical instruments for DEPB benefit under Product Group 89. The Assistant Commissioner denied the benefit, stating that the bags were not made of synthetic or cotton fabrics primarily. The Commissioner (Appeals) upheld this decision, leading to the present appeal.

Dr. Samir Chakraborty, representing the appellants, argued that the term "made-ups" in the DEPB Rates List and Customs Tariff Act encompassed the exported goods, which were textile products in their finished state ready for use. He highlighted that the goods were classified under Chapter Heading 6305, indicating they were "made-ups" as per Chapter Note 1 of Chapter 63.

Moreover, he emphasized that neither the Customs Tariff nor the DEPB provisions specified a minimum percentage of fabric required for classification as synthetic or cotton bags. He cited a precedent where bags made of jute, even with additional materials, were considered jute bags. He also contested the reliance on a CBEC Circular by the lower authority.

On the contrary, Shri N.K. Mishra for the Revenue argued that the bags contained components beyond synthetic or cotton fabrics, disqualifying them as "made-ups" for DEPB benefits. He linked DEPB incentives to neutralizing Customs duty on the import of export products based on standard input-output norms.

After considering the arguments, the tribunal found that the musical bags, despite containing other materials, were commonly known and classified as synthetic or cotton bags. They were deemed as "made-ups" under the relevant provisions, leading to the allowance of the appeal and granting consequential relief to the appellants. The decision was based on the understanding that the goods were marketable as polyester or cotton bags and met the criteria for classification as "made-ups" under the Customs Tariff.

This comprehensive analysis highlights the interpretation of "made-ups," the absence of fabric percentage requirements, the market perception of the goods, and the applicability of relevant tariff provisions in determining the eligibility for DEPB benefits in the case of polyester and cotton bags for musical instruments.