1996 (4) TMI 228 - AT - Customs

Summary

Issues Involved:
1. Confiscation of imported goods under Section 111(d) and 111(m) of the Customs Act.
2. Denial of benefit under Notification No. 45/94-Cus.
3. Imposition of penalty under Section 112(a) of the Customs Act.
4. Classification of goods as consumer goods under ITC Policy, 1992-97.

Detailed Analysis:

1. Confiscation of Imported Goods under Section 111(d) and 111(m) of the Customs Act:
The appellants imported goods described as "sheets for insole," which were plastic-coated fabrics, and claimed benefits under an open general license and a concessional duty rate under Notification No. 45/94-Cus. The goods were examined and found to be laminated sheets with fabric lining on one side. Samples were tested by the Council for Leather Export (CLE) and the Central Leather Research Institute (CLRI), which concluded that the samples were coated fabrics, not suitable as insoles or midsoles for the leather industry. Consequently, a Show Cause Notice was issued for confiscation of goods under Section 111(d) and 111(m) of the Customs Act.

2. Denial of Benefit under Notification No. 45/94-Cus:
The Collector of Customs denied the benefit of Notification No. 45/94-Cus, which provides a concessional duty rate for goods imported for use in the leather industry. The appellants argued that the notification's entry for "sheets for insole and midsole" should include all types of insoles, including loose or removable insoles. They cited various definitions and previous adjudications supporting their claim. The Collector, however, restricted the entry to fixed insoles, based on certificates from CLE, CLRI, and Bata India Limited, which indicated that the imported goods were not meant for insoles or midsoles.

3. Imposition of Penalty under Section 112(a) of the Customs Act:
The Collector imposed fines and penalties on the appellants, arguing that the goods were not covered by the exemption notification and were liable for confiscation. The appellants contested this, stating that the goods were intended for use as insoles and should be eligible for the concessional duty rate. They also argued that the goods were not consumer goods and thus did not require a specific import license.

4. Classification of Goods as Consumer Goods under ITC Policy, 1992-97:
The Collector classified the goods as consumer goods, making them subject to import restrictions under the ITC Policy. The appellants argued that the goods were raw materials for making insoles and not consumer goods, as they required further processing. They cited previous judgments and trade practices to support their claim. The Tribunal agreed with the appellants, stating that the goods could not be directly used to satisfy human needs and thus did not qualify as consumer goods.

Tribunal's Findings:
1. Confiscation and Notification Benefit: The Tribunal found that the imported goods could be used as loose or removable insoles, which fall under the category of "sheets for insole" as per Notification No. 45/94-Cus. The Tribunal noted that the definitions and trade practices supported the appellants' claim, and there was no reason to restrict the meaning of "insole" to fixed insoles only.

2. Penalty: Given that the goods were eligible for the concessional duty rate, the penalties imposed under Section 112(a) were not justified. The Tribunal set aside the penalties.

3. Consumer Goods Classification: The Tribunal held that the imported goods were not consumer goods as they required further processing before use. The goods were raw materials for the leather industry and thus did not fall under the definition of consumer goods in the ITC Policy.

Conclusion:
The appeals were allowed, and the Tribunal granted consequential reliefs to the appellants. The imported goods were deemed eligible for the concessional duty rate under Notification No. 45/94-Cus, and the penalties and confiscation orders were set aside. The goods were also not classified as consumer goods under the ITC Policy.