Full Judgment
2. The facts in brief are that the appellants herein imported a consignment of 8 pairs of two colour moulds of plastic vide Bill of Entry dated 3-3-1986. On examination of a sample of the goods from the imported consignment the Customs House found that though the goods imported will be assessable as moulds falling under Heading 8480 of Customs Tariff Act, 1975 yet the Customs House held that the goods were not eligible for exemption under Notification 314/85 on the ground that the moulds had been imported for the manufacture of the shoes which were not made of plastic and that the exemption was available only for moulds imported for the manufacture of artificial plastic articles. The Asstt. Collector's order was upheld by the Collector (Appeals).
3. Appearing for the appellants the learned Consultant Shri Kumar contended that what is manufactured by the appellants with the help of the moulds are plastic soles for the shoes and that to say that the shoe is not made of plastic material and to deny the exemption on this ground is not justified. It was also contended that there is nothing in the Notification indicating a condition that no material other than plastic material should be added in the final product. He also relied upon the decision in this context of the Tribunal in the case of Andhra Patrika, Madras v. Collector of Customs, 1983 (13) ELT 1103 (Tri.) in which it was held that if in addition to film processing the machine can perform other functions of paper processing as well the exemption under Notification 11/77-Cus cannot be denied on the ground that the exemption was meant exclusively for an automatic film processor. He also relied upon the other order No. 278/89-B2 of this Bench of the Tribunal dated 18-8-1989 in the case of T.I Diamond Ltd. in A. No.2003/83-B2 wherein the Tribunal held that if the machine imported was capable of performing Vickers Hardness Test, then on the mere fact that the same could be used for performing other tests, the benefit of exemption cannot be denied. Therefore, in the case of the present appellants it was contended that the moulds imported were for production of plastic soles for shoes which were fused together in an integrated process and will therefore, be eligible for exemption under Notification 314/85. Shri M.S. Arora, D.R. appearing for the department pointed out that the only thing manufactured by the appellants is the shoe, which is not of plastic, and hence there is no question of comparing with other cases where machine with multi-functions were dealt with. The Notification 314/85 exemption is to be given only for moulds used for the manufacture of plastic articles and it is well settled, the learned D.R. contended, that Notification has to be strictly interpreted. What is manufactured is shoes which are not of plastic and therefore, the department was right in denying the exemption. He placed reliance in the case of Golden Press v. Dy.
Collector reported in 1987 (27) ELT 273 to urge that Exemption Notification is not to be construed liberally.
3. We have carefully considered the submissions made by the learned counsel and the learned D.R. The goods imported are described in the related invoice as 8 pairs of two colour moulds for plastic. On examination of the sample of the goods these moulds were seen to consist of one shoe last, one pair of sole plate and two half rings. It was also found that in one pair mould set there were 4 shoe lasts, 4 half rings and 4 sole plates. The Asstt. Collector's finding was that what is being manufactured is shoe and not plastic articles and the shoe was not of plastic and therefore, he held that the exemption under Notification 314/85 could not be extended to the goods imported. This Notification says that moulds and dies falling within Chapter 84, when imported for the manufacture of artificial plastic articles is exempted from duty in excess of 25% subject to the condition that it is proved to the satisfaction of the Asstt. Collector of Customs that the said moulds or dies have been imported for the manufacture of artificial plastic articles. There is an explanation to the Notification which says that for the purpose of this Notification the expression 'moulds' means Moulds into which plastic material in molten or semi-molten or powder or granular or flake form is fed by gravity or by injection or by suitable process so that the material acquires the resultant shape from the Moulds. The present import is of Moulds consisting of shoe lasts, sole plates and half rings as already described above. The appellants have produced the catalogue of the machine for which the moulds are imported. Moulds are being supplied by the manufacturer of the machine M/s. Ottagali Spa of Italy. The catalogue describes the purpose for which the machine is designed as follows : "Automatic rotary plants for the production of shoes with unit soles injected straight on to the upper, in compact and expanded thermoplastic materials." "Two last are fixed on the last-carrying head THUS KEEPING THE UPPER PRE-MOUNTING PROCESS UNCHANGED. The two colours of the sole, which can also be seen on the edge, are obtained by the automatic change of the two plates. Movements are all automatic and oleodynamically operated.
The direct action of the oleodynamic cylinders allows a continuous and perfect clamping." From the above it appears that the materials are for use in the machine, which is essentially an injection moulding machine, where even fusing of the upper for the shoes with the soles is also by an injection process. It also indicates that the machine is having a shoe last carrying head and mould carrier base in which the sole plates being the mould are to be fixed. The process of the manufacture has been given by the appellants in a write-up dated 4-12-1989. They have stated that one pair of moulds consists of 4 lasts, 2 set of rings (4 halves) and 4 sole plates. First of all upper is put on the last and pulled so that it makes the shape of a shoe, then by hydraulic process, the last is lowered down, and the first injection of sole, i.e. the bottom sole, is made by the help of sole plate. It is further stated that in the second process - again by hydraulic process, the sole plate comes up and the last on which the upper is mounted is covered by the ring set and the sole plate and then the second injection is carried out, thus forming, a complete shoe. From the above detailed description of the nature of the machine, and the design of the mould carrier group, and on perusal of the operation for manufacture of the shoes, as given in the write up, we find that the moulds imported are used for injecting plastic material and which gives shape to the soles of the shoes which is fused with the upper placed in the shoe last, in a further injection of process. All these processes take place in an injection moulding machine. The whole set, even according to the Asstt.
Collector, consisting of shoe lasts, sole plates and rings has been classified as a mould, and we have seen that this mould is designed for use in a plastic injection moulding machine, and the moulds are further used for producing soles by injection process, which are further fused with the upper by a second injection process in the same machine.
Therefore, the moulds are in fact used for production essentially of plastic soles for the shoes and what is therefore, manufactured with the moulds is the plastic sole in the process. It is also noted that the plastic sole is a recognised component of a shoe and as such an article but in the peculiar process employed there is an integrated process by which the sole which is moulded is also fused with the upper again by an injection process in an injection moulding machine imported from the foreign manufacturer of footwear injection moulding machine, as seen from the manufacturer's invoice for the moulds imported. In these circumstances, therefore, in our view, the moulds imported can be taken to have satisfied the condition for exemption under Notification 314/85 and the same cannot be denied on the ground taken by the department in view of the peculiar facts related to this case and the process of production of the shoes which are the final product. In this view of the matter the appeal is allowed.