2001 (11) TMI 80 - SC - Customs

Whether goods imported by the appellant should have been considered for the purpose of duty as it existed at the time of import? Held that - The PVC Cloth could be transformed into Shoe Upper only after cutting into pieces and piercing holes therein and putting a flap on it. This contention also does not carry much force. The PVC Cloth is printed and embossed and, by cutting into 3 pieces, 3 Shoe Uppers are available and they have all substantial and essential characteristics of shoe uppers. It is pertinent to note that printing and embossing work is not merely cosmetic in nature to give an added appeal to the goods, but they distinctly give the patterns of Shoe Upper and therefore, we do not think that the Tribunal had gone wrong in affirming the decision of the Commissioner. Appeal dismissed.

Summary

Issues:
1. Classification of imported goods under the Customs Act, 1962.
2. Interpretation of Notification No. 79/95-Cus. dated 31-3-95 for duty exemption.
3. Application of Rule 2(a) of the General Rules of Interpretation attached to the Customs Tariff Schedule.

Analysis:

1. Classification of imported goods under the Customs Act, 1962:
The case involved the appellant, a manufacturer and exporter of leather and synthetic footwear, who imported "Printed PVC" under a Value Based Advance Licence (VBAL) for use in manufacturing synthetic footwear. The dispute arose when the Assessing Officer classified the imported goods as "Shoe Uppers" instead of PVC Cloth, leading to a show cause notice for misclassification. The Commissioner upheld this classification under Heading 6406.10, covering "Uppers and parts thereof, other than stiffeners." The Tribunal affirmed this decision, emphasizing the distinct characteristics of the imported PVC sheets resembling shoe uppers when cut, leading to a penalty imposed on the appellant.

2. Interpretation of Notification No. 79/95-Cus. dated 31-3-95 for duty exemption:
The appellant argued for duty exemption under Notification No. 79/95-Cus., claiming that the imported "Printed PVC" should be covered under the exemption as it was intended for use in manufacturing synthetic footwear. However, the respondent contended that the printing and embossing on the PVC sheets transformed them into identifiable parts of shoe uppers falling under Heading 6406. The Tribunal reduced the penalty but upheld the classification, emphasizing the characteristics of the imported goods resembling shoe uppers rather than plain PVC cloth.

3. Application of Rule 2(a) of the General Rules of Interpretation:
The appellant invoked Rule 2(a) of the General Rules of Interpretation attached to the Customs Tariff Schedule to argue for the benefit of duty exemption. The Court rejected this argument, stating that while the dispute did not concern classification, the goods in question exhibited distinct features of shoe uppers rather than plain PVC cloth, justifying the denial of duty exemption. The Court cited precedents to support the decision, emphasizing the importance of the actual characteristics of the imported goods in determining their classification and duty liability.

In conclusion, the Supreme Court dismissed the appeal, affirming the classification of the imported goods as shoe uppers under Heading 6406.10, denying duty exemption under Notification No. 79/95-Cus., and rejecting the application of Rule 2(a) of the General Rules of Interpretation in this context.