2011 (8) TMI 946 - AT - Central Excise

Non printing of MRP on footwear - exemption upto Rs. 125/- per pair - Notification No. 6/02 as amended by Notification No. 23/04 dated 9-7-2004 and Notification No. 5/06, dated 1-3-2006 introduced w.e.f. 9-7-2004 - The case of the Revenue is that as per the conditions of the above mentioned notifications, the footwears having sale price not exceeding Rs. 125/- per pair are entitled for full exemption - It is also submitted that as per the instructions issued by the Board, the footwear is to be treated as manufacture for the purpose of column 4 of RG-I as soon as the uppers and soles are assembled and joined - In the present case as 18061 pairs found in fully finished condition in the factory without printing of retail sale price hence the appellant availed the benefit of notification wrongly for the past period i.e. from 9-7-2004 - The Revenue only confiscated 18061 pairs which were not marked with retail sale price - Held that footwears were still in factory and from the statement of excise clerk that there are some technical difficulties in printing the MRP it cannot be concluded that the shoes under seizure were going to be cleared without printing the MRP - Appeal is allowed

Summary

Issues Involved:
1. Demand of duty and penalty under Section 11AC of the Central Excise Act.
2. Confiscation of footwear without retail sale price (MRP) marked or embossed.
3. Invocation of the extended period of limitation on the ground of suppression of facts.
4. Time-barred demand and retraction of statements by the appellant.

Issue-wise Detailed Analysis:

1. Demand of Duty and Penalty under Section 11AC of the Central Excise Act:
The appellant contested the demand of Rs. 2,49,73,067/- and the equal amount of penalty imposed under Section 11AC of the Central Excise Act. The demand was based on the alleged violation of Notification No. 6/02 as amended by Notification No. 23/04 and Notification No. 5/06, which required footwears to have the retail sale price indelibly marked or embossed to avail exemption/concessional rate of duty. The Revenue's case was that 18061 pairs of footwear found in the appellant's factory did not have the MRP marked or embossed, thus violating the notification conditions. The appellant argued that the condition of MRP marking was factually incorrect as only 18061 pairs out of 24517 pairs were found without MRP, and there was no evidence that these unmarked footwears were cleared without marking the MRP.

2. Confiscation of Footwear without Retail Sale Price (MRP) Marked or Embossed:
The adjudicating authority confiscated the footwear found without MRP marking and allowed their release on payment of a redemption fine of Rs. 5.00 lakhs. The appellant contended that the confiscation was unjustified as the footwears were still in the factory and there was no evidence that they were going to be cleared without MRP marking. The presence of 6456 pairs of footwear with MRP marking in the factory indicated that the process of marking was ongoing. The tribunal found that the confiscation was not sustainable as there was no evidence that the footwears were to be cleared without MRP marking.

3. Invocation of the Extended Period of Limitation on the Ground of Suppression of Facts:
The Revenue invoked the extended period of limitation, alleging suppression of facts by the appellant. The appellant argued that the demand was time-barred as the benefit of the notification was reflected in their monthly returns, and there was no intent to evade duty. The tribunal found that the demand was not sustainable on the evidence on record, particularly since no footwear was found outside the factory without retail sale price printed, and affidavits from 62 dealers confirmed that the footwears received by them had MRP printed.

4. Time-barred Demand and Retraction of Statements by the Appellant:
The appellant argued that the demand was time-barred and that the statements relied upon by the Revenue were retracted by the General Manager and the excise clerk. The tribunal noted that the retraction of statements was not made before the investigating authority, and there was no evidence that affidavits were submitted to the Revenue. However, the tribunal concluded that the demand was not sustainable as there was no evidence that footwears were cleared without MRP marking, and the presence of 6456 pairs with MRP marking indicated compliance with the notification conditions.

Conclusion:
The tribunal set aside the impugned order, finding that the demand of duty and penalty was not sustainable on the evidence presented. The confiscation of footwear was also found to be unjustified as there was no evidence that the footwears were to be cleared without MRP marking. The appeal was allowed, and the order was pronounced in the court on 1-8-2011.