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Issues:
1. Assessment of customs duty under Tariff Item 72(b) instead of 72(15) for imported machinery. 2. Interpretation of whether machinery exclusively for making boots and shoes falls under Tariff Item 72(15). 3. Reconsideration of the judgment by the Government of India under Section 131(3) of the Customs Act, 1962. 4. Application of rules for interpretation of the Schedule in Customs Tariff Act, 1975. Analysis: Issue 1: Assessment of customs duty under Tariff Item 72(b) instead of 72(15) The appellants imported machinery for making footwear and claimed it should be assessed under Tariff Item 72(15) at a lower duty rate. The Government initially exempted such machinery from excess duty under Notification No. 2 of 1971. However, the Assistant Collector assessed it under Item 72(b) as the machinery could make various types of footwear. The Appellate Collector disagreed, stating that the machinery was primarily for making boots and shoes, thus eligible for Item 72(15) duty rate. The High Court observed that the machinery's general use for different footwear types did not exclude it from being classified under Item 72(15) if primarily intended for boots and shoes. Issue 2: Interpretation of machinery exclusively for making boots and shoes The Government later reversed its decision, stating that machinery must be exclusively for boots and shoes to qualify under Item 72(15). The High Court disagreed, emphasizing that the machinery's capability to make other footwear types did not disqualify it from being classified under Item 72(15). The Court noted that the machinery's intended use for boots and shoes, even if it could also make chappals, justified its classification under the specific item rather than the general one. Issue 3: Reconsideration by the Government under Section 131(3) of the Customs Act The Government initiated a review under Section 131(3) and concluded that the machinery's ability to make chappals excluded it from Item 72(15). However, the Court found this reasoning flawed, emphasizing that the machinery's primary use for boots and shoes warranted its classification under Item 72(15). The Court highlighted the importance of the machinery's predominant or ordinary purpose in determining its classification. Issue 4: Application of rules for interpretation of the Schedule The Court applied the rules for interpreting the Customs Tariff Act, 1975, emphasizing that specific descriptions take precedence over general ones. It noted that the machinery's intended use for boots and shoes, coupled with the lack of evidence supporting its exclusive use for chappals, justified its classification under Item 72(15). The Court also considered the bona fide nature of the import, as the machinery was genuinely intended for making boots and shoes, not for deceptive purposes. In conclusion, the High Court ruled in favor of the appellants, setting aside the Government's order and allowing the writ appeal. The Court emphasized the machinery's primary purpose for making boots and shoes, leading to its classification under Tariff Item 72(15) for duty assessment.
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