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Sunday, 5 February 2017

Footwear without back strap is sandal, not chappal: HC

Is a woman’s footwear without a back strap a “sandal” or a “chappal”? The Delhi High Court ruled earlier this week that it is a “sandal.”

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.

Duty drawback
At the core of the dispute is the Centre’s order that export of sandals attracts 10% customs duty drawback while export of chappals attracts only 5% drawback.

A customs duty drawback is a refund given to business houses or manufacturers who import machinery or raw material in order to export their product.

These manufacturers pay import duty on purchase of the raw material but can later claim a drawback, or refund on the duty paid, as they export their product. This is done to encourage exports.

Wishall demanded duty drawback at 10%, claiming their products were sandals but the Centre and Revenue Department claimed they were chappals and hence the company was entitled to only 5% drawback.

The dispute broke out in May 2003 when the company filed a shipping bill to export “ladies leather sandals.”

The Customs Department in New Delhi, however, said the export consignment were chappals not sandals.

The company then sought an opinion from the Council of Leather Exports, which cleared the export consignment as sandals.

It was now the turn of the Customs to move the Council, which sought the opinion of the Footwear Design and Development Institute (FDDI) in Noida.

FDDI ruling
The FDDI ruled the product to be chappals. Following this, the Customs served a show-cause notice on the company, demanding recovery of the drawback already paid at 10% as well as a penalty.

The dispute ultimately landed before the Delhi High Court. The company said the fact that the product did not contain a back strap did not “detract from the fact that they were known to the users as sandals”.

A Bench of Justice S. Ravindra Bhat and Justice Najmi Waziri ruled that the Centre and the Revenue Department “acted upon prejudice and a preconceived notion that ladies sandals cannot be without a back strap.”

“The Council, a Central government body, which routinely deals with these issues, had furnished an opinion that the goods were sandals and not chappals. Apart from this, the court wonders whether any of the experts in this case was a woman, the ultimate customers,” the Bench said.

Relied on SC ruling
The court relied on a 1989 Supreme Court judgment which held that if any expression in the statute, in this case sandal and chappal, then the items in the Customs entries should be judged on the basis of how these expressions are used in popular parlance.

(Source: The Hindu)

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