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India
29 Jan 2017

Footwear without back straps are sandals, declares Delhi High Court

Sandals or chappals? Delhi High Court answers it

Have you ever wondered whether ladies' footwear devoid of a back strap is a "sandal" or a "chappal"?

The Delhi High Court, earlier this week, ruled that they are indeed sandals.

The court ruling came when Wishall International, a Chennai-based footwear manufacturer, in a customs duty drawback dispute, challenged the Central government's position that ladies' footwear without a back strap is a chappal.

In context

Sandals or chappals? Delhi High Court answers it

What is a customs duty drawback?

A customs duty drawback is given to manufacturers who import raw materials and/or machinery (and pay import duty) to export goods. The drawback is a refund on the import duty paid when their goods are exported. For chappals, it is 5%, and for sandals, 10%.

The dispute: part 1

Wishall International gets into conflict with the Customs Department

The dispute dates back to 2003, when Wishall International filed a shipping bill to export "ladies' leather sandals", and demanded a 10% customs duty drawback.

The Customs Department in New Delhi, however, challenged Wishall's claim.

Wishall then moved the Council of Leather Exports, which cleared the shipping consignment as sandals, and Wishall duly received their 10% customs duty drawback.

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The dispute: part 2

Wishall moves Delhi High Court challenging the Customs Department

Not to be outdone, the Customs Department then moved the Council of Leather Exports, which, in turn, sought the guidance of the Footwear Design and Development Institute (FDDI) in Noida.

The FDDI declared the product to be chappals.

Subsequently, the Customs Department served a show-cause notice to Wishall, demanding recovery of the 10% drawback plus a penalty.

Wishall then moved the Delhi High Court.

The Delhi High Court's judgement

Judgement

The Delhi High Court's judgement

The Delhi High Court ruled that the Centre and the Revenue Department had "acted upon prejudice and a preconceived notion that ladies sandals cannot be without a back strap".

The bench based the ruling on a 1989 Supreme Court judgement which had ruled that in case of a dispute, Customs entries should be judged on what an item is called popularly.

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