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Correct classification of imported blank video cassettes under Exim Code No. 852390 03.20 or 852390 03.90. Analysis: The dispute in the present appeal revolves around the correct classification of imported blank video cassettes. The appellants imported 44,000 pieces of 1/2" VHS Type NV-E 180 blank Video Cassettes valued at Rs. 14,38,800/- and sought clearance under Exim Code No. 852390 03.20. However, the Revenue contended that the cassettes should be classified under Exim Code No. 852390 03.90, requiring a specific import license due to their exclusive use with VHS Type VCR. Consequently, the impugned goods were confiscated and a penalty imposed on the appellants for ITC violation. The appellants challenged this decision, leading to the present appeal. The primary argument presented by the appellants' counsel was that the Adjudicating authority erred in classifying the cassettes under Exim Code No. 852390 03.90, as there was no restriction in Exim Code No. 852390 03.20 limiting it to S-VHS cassettes only. The counsel highlighted the binding effect of the Directorate of Foreign Trade's classification, emphasizing that similar goods had been cleared under Exim Code No. 852390 03.20 by other Customs authorities. Additionally, it was contended that the impugned order violated principles of natural justice by not providing a hearing or issuing a Show-cause Notice, as mandated by the Customs Act, 1962. On the Revenue's side, it was argued that although the cassettes could be played on S-VHS type VCR, they were specifically designed for use in VHS type VCR, as indicated by accompanying leaflets. The Revenue also mentioned an ongoing appeal against a similar decision by the Additional Commissioner regarding the classification of such goods. After considering both parties' submissions and the evidence, the Tribunal found merit in the appellants' arguments. The Tribunal interpreted the term "suitable" in Exim Code No. 852390 03.20 to mean "capable of being used," thereby concluding that the cassettes, which could function in S-VHS type VCR, were suitable for use with such VCRs. This interpretation aligned with the DGFT's classification and the provision in the Exim Policy 1997-2000, which mandated adherence to the DGFT's decisions in case of doubt. Consequently, the Tribunal held that the impugned goods should be classified under Exim Code No. 852390 03.20 and allowed for free importation. As a result, the impugned order was set aside, and the appeal was allowed in favor of the appellants.
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