Advocated By :   Mrs. Reena Khair, Advocate, for the Appellant.

Shri A.K. Chattopadhaya, JDR, for the Respondent.

[Order per : Dr. S.N. Busi, Member (T)]. - The dispute in the present appeal relates to correct classification of “1/2" VHS Type NV-E 180 blank Video Casettes” of Japanese orgin whereas M/s. Quick International of Ajmer claims classification of the same under Exim Code No. 852390 03.20 of the ITC (HS) Classifications of Export & Import Items as freely importable, the Revenue classifes it under Exim Code No. 852390 03.90 requiring specific import licence.

2. The appellants had imported 44,000 pieces of the Blank Video Cassettes of the type described above valued Rs. 14,38,800/- and filed Bill of Entry dated 30-12-99 for their clearance under OGL claiming classification of the same under Exim Code No. 852390 03.20. Revenue felt that such cassettes meritted classification under Exim Code No. 852390 03.90 as the same are for exclusive use with VHS Type VCR 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. 14,00,000/- 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. 21/2000-Commr. dated 3-12-1999. Being aggrieved by the said order, the present appeal has been preferred by the appellants.

3. Mrs. Reena Khair, learned Advocate appearing for the appellants, submits that the Adjudicating authority erred in holding that the impugned cassettes meritted classification under Exim Code No. 852390 03.90 as the same are “suitable” for use only in VHS type VCR, the latter being in the nature of consumer goods. The learned Advocate argues that Exim Code No. 852390 03.20 nowhere stipulates that its entry is restricted to S-VHS video cassettes only and as such there is no prohibition to classify the impugned cassettes in it. She further argues that the finding of the Adjudicating authority is contrary to the classification given by the Directorate of Foreign Trade (DGFT). She points out that as per the provisions contained in para 4.13 of Chapter 4 of the Exim Policy 1997-2000, the classification issued by the DGFT has the binding effect. She invites attention to the DGFT’s letter dated 30-8-99 addressed to Joint Commissioner of Customs, Ahmedabad and another letter dated 17-12-1999 addressed to Commissioner of Customs, Calcutta (in their own case) wherein it is clarified that “a specific entry against the ten digit Exim Codes (as mentioned above) will take procedure over general entry against the Main Heading No. 85.23 of ITC (HS) Classifications of Exports & Imports.” The learned Advocate refers to the decision of Commissioner of Inland Container Depot, Tuglakabad, New Delhi vide his order dated 29-3-2000 wherein he classified the similar goods under Exim Code No. 852390 03.20 and allowed clearance without any specific import licence. The learned Advocate argues that the Adjudicating authority acted illegally inasmuch as similar and identical goods were cleared by the same Custom House under the Exim Code No. 852390 03.20 and as such the action of the Revenue is arbitrary and discriminatory. She further argues that the impugned order is ab initio void inasmuch as the same has been passed without giving an opportunity for hearing to the appellant and without issuing any Show-cause Notice and as such violated the principles of natural justice. She pleads that it is settled law that even if the Show-cause Notice is waived, it is mandatory duty of the Department to issue a Show-cause Notice as required under Section 124 of the Customs Act, 1962.

4. Shri R.K. Roy, learned JDR appearing for the Revenue, argues that although the impugned cassettes can be played on S-VHS 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 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 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 the disposal. He submits that although interpretation of the Exim Policy is with the DGFT, it cannot be said that the Customs Department have anything to say in the matter connected with the Customs Revenue.

5. After carefully considering the submissions from both sides and on perusal of the available evidence on record, we find greater force in the arguments of the learned Advocate inasmuch as the word “suitable” in the entry against Exim Code No. 852390 03.20 shall cover any or all 1/2" video cassettes that can work on S-VHS video cassettes imported by M/s Shree Salasar Impex, New Delhi, are demonstrated before Deputy Commissioner of Customs, Calcutta Custom House and found that the same can work on S-VHS type of VCR. We are of the the view that the word “suitable” shall be interpreted to mean “capable of being used”. When the impugned cassettes are capable of being used in S-VHS type of VCR it shall be construed 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 classification of the DGFT to that effect which the Customs Department cannot ignore in view of the 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”. We, are, therefore, convinced that the impugned goods are correctly classifiable under Exim Code No. 852390 03.20 and as such freely importable. In this view of the matter, the impugned order is required to be set aside. Accordingly, we do so.

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

Equivalent 2001 (131) ELT 0471 (Tri. - Kolkata)