Advocated By :   S/Shri B. Saha and Aftab Ahmed, Advocates, for the Appellant.

Shri R.K. Roy, JDR, for the Respondent.

[Order]. - The dispute in the instant appeal relates to correct classification of “1/2” Panasonic NV-E 180 HDA-VHS Blank Video Cassette” of Japanese origin. Whereas M/s. Shree Salasar Impex, Kolkata claims Classification of the same under Exim Code No. 852390 03.20 of ITC (HS) Classifications of Export & Import Items as freely importable, the Revenue classifies it under Exim Code No. 852390 03.90 requiring specific import licence.

2. The appellants had imported 45,500 pieces of the Blank Cassettes of the type described above valued Rs. 14,86,143.75 and filed Bill of Entry dated 30-12-1999 for their clearance under OGL claiming classification of the same under Exim Code No. 852390 03.20. From the product catalogue the Revenue found that the said cassettes are for the exclusive use with VHS/VCR. Since the Exim Code No. 852390 03.20 covers “1/2” Video cassettes suitable to work with Betacam/Betacam SP M.II S-VHS/Digital-S Type VCR”, the Revenue felt that the impugned cassettes would not merit classification under the said Exim Code No. 852390 03.90 the import of which requires specific licence. As the appellants failed to submit import licence covering the said consignment, the impugned goods were confiscated with redemption fine of Rs. 7,50,000/- under Section 111 (00d) of the Customs Act, 1962 for ITC violation and imposed a penalty of Rs. 1,00,000/- on the appellants under Section 112 ibid vide Order-in-Original No. 23/2000 dated 24-2-2000. Being aggrieved by the said order, the present appeal has been preferred by the appellants.

3. Shri B. Saha, ld. Advocate appearing for the appellants, assisted by Shri Aftab Ahmed, ld. Advocate, argues that the Adjudicating authority erred in interpreting the Exim Policy and instead of “suitability” of the Cassette, he laid emphasis on “superiority” of the cassette. He explains that the use of the word “suitable” in the entry against Exim Code No. 852390 03.20 shall cover any or all ˝” Video cassettes that can work on SVHS Video cassettes. He points out that it was amply demonstrated before the Deputy Commissioner of Customs that the impugned cassettes are suitable for working on SVHS Video and the picture as well as the sound are considered to be sound. He argues that it is wrong to read the word “suitable” to mean “superior picture clarity and sound fidelity”. He submits that the literature for Panasonic VCR which has been furnished to the Custom House mentions that not only SVHS type Video cassettes but also VHS type Video cassettes can be played for recording in SVHS type VCR. He points out that similar/identical video cassettes were allowed clearance by Calcutta Custom House in the past classifying the same under Exim Code No. 852390 03.20 and without insisting for import licence. He invites attention to para 4.13 of Chapter 4 of the Exim Policy 1997-2000 according to which interpretation of the Policy rests with the Directorate General of Foreign Trade (DGFT) and the DGFT vide their letter dated 14-3-2000 addressed to Shri A.K. Raha, Commissioner of Customs, Calcutta clarified that the impugned cassettes are suitable for work with both the S-VHS/VHS type VCRs. The ld. Advocate has also referred to the letters dated 17-12-99 and 5-1-2000 of the DGFT addressed to the Commissioner of Customs, Calcutta and letter dated 30-8-1999 addressed to Joint Commissioner of Customs, Ahmedabad, to the same effect. He has also invited attention to the Order-in-Original dated 31-3-2000 of Additional Commissioner of Customs, Calcutta in which similar goods have been held to be classifiable under Exim Code No. 852390 03.20 and not under 852390 03.90. He, therefore, prays that the impugned order may be set aside with consequential relief to the appellants.

4. Shri R.K. Roy, ld. JDR appearing for the Revenue, while defending the impugned order argues that although the impugned cassettes can be played on SVHS type VCR, the same are made only for use in VHS type VCR. The leaflet taken out from the Video cassette clearly states that the cassette is for use exclusively in VHS type of VCR. He distinguishes the VHS cassettes and S-VHS cassettes by saying that the picture quality and fidelity is better and magnetic power is higher in the S-VHS cassettes than in the VHS cassettes. He admits that the similar goods were held to be classifiable under Exim Code No. 852390 03.20 by Additional Commissioner but informs that the Revenue has filed an appeal before Commissioner (Appeals) against the said decision and is awaiting disposal. He submits that although interpretation of the Exim Policy is with the DGFT it cannot be said that the Customs Department have nothing to say in the matter connected with Customs revenue.

5. After carefully considering the submissions from both sides and on perusal of the available evidence on record, I find greater force in the arguments of the ld. Advocate inasmuch as the word “suitable” in the entry against Exim Code No. 852390 03.20 shall cover any or all ˝” video cassettes that can work on S-VHS video cassettes. It is on record that it was demonstrated before Deputy Commissioner of Customs that the impugned cassettes can work on the S-VHS type of VCR. I agree with the ld. Advocate that it is wrong to read the word “suitable” to mean “super picture clarity and sound fidelity”. When the impugned cassettes are capable of being used in S-VHS type of VCR it can be considered to mean that the same are suitable for use with such type of VCR and as such merit to be classified under the Exim Code No. 852390 03.20. Moreover, there is a categorical clarification of the DGFT to that effect in respect of the impugned goods which the Customs cannot ignore in view of the provision contained in para 4.13 of Chapter 4 of the Exim Policy 1997-2000 which reads : “If any question or doubt arises in respect of the interpretation of any provision contained in this policy, or regarding the classification of any item in the book titled “ITC (HS) Classifications of Export & Import Items”, the said question or doubt shall be referred to the Directorate General of Foreign Trade whose decision thereon shall be final and binding”. I am, therefore, convinced that the impugned goods are correctly classifiable under Exim Code No. 852390 03.20 and as such freely importable. In view thereof, the impugned order is required to be set aside. Ordered accordingly.

6. In the result, the appeal is allowed with consequential relief, if any, to the appellants.