Is a woman’s footwear without a back strap a “sandal” or a “chappal”?
A woman’s footwear without a back strap is a sandal, the Delhi High Court has ruled opposing the government’s contention that it was a ‘chappal’. The judgment came after a Chennai-based footwear manufacturer, Wishall International, challenged the Centre’s position that a woman’s footwear without a back strap is a chappal and not a sandal.
The firm in May 2003 had filed a shipping bill to export the consignment declared as “ladies leather sandals” claiming 10 per cent customs duty drawback. The Customs Department here, however, had said the export consignment were chappals.
The issue assumed significance as the export of sandals attract a 10 per cent customs duty drawback, while that of ‘chappals’ attracted only five per cent duty. The government had withdrawn a 10 per cent duty drawback saying the footwear exported by it were ‘chappals’ as these did not have back strap. The Delhi High Court, while ruling that these were sandals, quashed the government’s decision. Disagreeing with the government’s view, a bench of justices S Ravindra Bhat and Najmi Waziri ruled, “The respondents (Centre and the Revenue Department), in our opinion, acted upon prejudice and a preconceived notion that ladies sandals cannot be without a back strap”.
Duty drawbacks were introduced by the government under Sections 74 and 75 of the Customs Act, 1962 as one of the most popular methods of encouraging exports.
A drawback is a refund of a duty previously paid on exporting excisable articles or on re-exporting foreign goods. A customs duty drawback is when the exporter may claim ‘drawback’ or refund of excise and customs duties paid by his suppliers.
The court said that an expert body, Council of Leather Exports which routinely dealt with such issues in context of export, had, based on evidence and instructions of government, furnished an opinion that goods were sandals and not chappals.
The company had sought opinion from the Council of Leather Exports which had cleared the export consignment as sandals. But the Customs department approached the Council that sought the opinion of Footwear Design and Development Institute (FDDI), which ruled that the products were chappals.
Following this, the Customs served a show-cause notice on the company, demanding recovery of the drawback already paid at 10 per cent as well as a penalty.
The government, relying on an opinion tendered by Footwear Design and Development Institute (FDDI), Noida, rejected the appeal stating,
“The Government observes that the applicant sought to export the goods by declaring the same as ladies leather “sandals” under DBK Sr.No.64.06 attracting 10% of Drawback. The goods were examined 100% and representation samples were sent to Footwear Design and Development Institute, Noida for their opinion. FDDI, Noida vide its letter dated 13.10.2003 stated that goods fell in the category of “chappals” under heading 64.10 and hence, attracts Drawback @5%.”
The Court held that the opinion of experts cannot be the final word in this case and the commercial parlance test would have to be applied.
“The respondents, in our opinion, acted upon prejudice and a preconceived notion that ladies sandals cannot be without a back strap. To hold so, there ought to have been some evidence of commercial purpose; the fact that the Council – a Central government body, which routinely deals with these issues in the context of export, had, based on evidence and instructions of the Government furnished an opinion that the goods were sandals and not chappals was deemed insufficient. Apart from these, the court wonders whether any of the experts in this case was a woman, the ultimate customers. In such cases, the commercial parlance test would predominate.”
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