K. G. Balakrishnan, J. - (1.) The appellant, a manufacturer and exporter of leather and synthetic footwear, obtained a Value Based Advance Licence (VBAL) issued in terms of Para 49 of Export Import Policy 1992-93. The Licence permitted the appellant to import "printed PVC" with technical characteristics of "PVC Leather Cloth" for use in the manufacture of the export product "Synthetic footwear". The appellant filed Bill of Entry for clearance of goods described "Printed PVC" (PVC leather clothes) for consumption, claiming coverage of VBAl Scheme. Appellant sought clearance of the same as duty free under Notification No. 79/95-Cus. dated 31-3-95 issued by the Central Government under Section 25(1) of Customs Act, 1962 which permitted exemption for the whole of the duty of customs for the "materials" imported into India against VBAL Scheme. The Licence listed "Printed PVC" as an eligible item of import. The Assessing Officer after examination of the sample expressed the opinion that the goods had the essential characteristics of "Shoe Uppers" and it could not be identified as PVC Cloth. A show cause notice was issued to the appellant stating that goods were liable to be classified as "Shoe uppers", which are parts of footwear under the heading 6406, and the declaration made by the appellant in the bills of entry was wrong and the goods are liable for confiscation and further imposition of penalty.
(2.) The Appellant submitted a reply and also produced a letter issued by Joint Director General of Foreign Trade, speaking for DGFT, addressed to the Commissioner of Customs wherein it was stated as under :- 2. "The matter has been examined in the Special Advance Licence Committee on the basis of sample produced. The committee observed that what is allowed for imports is "PVC Leather Cloth" and just by printing and embossing thereon and importing in cut lengths, the basic character of PVC Leather Cloth does not change. Moreover, just because import has been made in cut length and imported material would be converted into footwear components, it cannot be treated as footwear components. 3. In view of this you are advised to take appropriate action. Specimen of sample (2 Pieces) are sent herewith." After considering the matter, the Commissioner held that on examination of goods imported, it reveals that the item is not just PVC Leather cloth but something more than that and each piece is having a pattern of 3 shoe uppers, printed/embossed, and when cut, each of these pieces is distinguishable and identifiable as a part of shoe upper and, therefore, it merits classification under heading 6406.10 which specifically covers "Uppers and parts thereof, other than stiffeners".
(3.) An order of classification was passed under Section 111(m) of the Customs Act, 1962, permitting redemption of goods on payment of Rs. 10 lakhs and imposing penalty of Rs. 50,000/- in terms of Section 112(a) of the Act. The appellant challenged the order before the Tribunal and the Tribunal, upholding the order, however, reduced the fine from Rs. 10 lakhs to Rs. 1 lakh.;