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Issues:
- Importer claiming exemption under entry 108 (1) of Notification 23/98 for nylon tricot flocking fabrics. - Denial of benefit, confiscation, and penalty imposed by the Commissioner. - Interpretation of conditions under the notification for goods in the leather industry. - Change in practice by the Custom House due to Circular 74/98. - Imposition of penalty and confiscation of goods justified. Analysis: The appellant imported nylon tricot flocking fabrics seeking exemption under entry 108 (1) of Notification 23/98 for use in the leather industry. However, during investigations, the importer admitted the goods were intended for sale to garment manufacturers, not the leather industry. The Commissioner, in the impugned order, denied the exemption, confiscated the goods, and imposed a penalty, leading to this appeal challenging the decision. The notification contains two clauses for goods in the leather industry, with different conditions. While clause (1) has no specific conditions, clause (2) mandates compliance with Condition 14, requiring a valid registration-cum-membership certificate from the Council for Leather Exports and an undertaking for proper use, maintenance of accounts, and duty payment if conditions are breached. The appellant's counsel did not contest the denial of notification benefits but focused on challenging the confiscation and penalty. It was argued that the Custom House historically allowed the benefit to such goods until the issuance of Circular 74/98, which changed the practice based on doubts raised about certain goods' eligibility for exemption. The Commissioner relied on the circular, which directed adherence to the Supreme Court's judgment on end-use conditions for goods like nylon tricot fabrics. The circular prompted the Custom House to alter its practice, leading to the denial of benefits post-shipment of the goods in question. The appellant contended that the sudden change in practice post-shipment was unforeseeable, justifying the appeal against penalty and confiscation. Ultimately, the Tribunal acknowledged the importer's predicament due to the Custom House's practice shift after shipment and the unforeseeable change post-export. Consequently, the appeal was allowed, overturning the confiscation and penalty imposed, highlighting the importance of procedural fairness and predictability in customs practices.
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