2015 (6) TMI 733 - AT - Central Excise

Valuation of goods - Exemption under notification No.5/06-CE dated 01/3/06/(Sl.No.5) - Whether the retail price was indelibly printed or embarks on the shoes - Held that - Director of the appellant company had initially given the statement that the price was not being printed or embossed but he has subsequently retracted his statement. Other than this, there is no evidence that the appellant were not complying with this condition. - Even if in respect of a product being supplied to institutional buyers, there is no requirement to print the MRP in terms of Standards of Weights and Measures Act and the Rules made thereunder, but if for availing nil rate of duty or concessional rate of duty under some exemption notification, there is a condition that such retail price must be printed or embossed, the assessee would have to comply with that condition for availing the exemption even if this is not required for compliance with the provision of Standards of Weights and Measures Act and the Rules made thereunder. In this case the Department has not recovered any consignment of shoes supplied to Defence organisations on which there is no MRP printed and as such there is absolutely no evidence that the appellant were not complying with this condition of exemption notification. In view of this, just because the shoes were supplied to Defence organisation, which according to the Department are institutional buyers it cannot be presumed that no MRP had been printed or embossed on the footwear. - impugned orders denying the benefit of exemption Notification 5/06-CE dated 01/3/06 (SI. No. 5) are not sustainable. The same are set aside. - Decided in favour of assessee.

Summary

Issues:
1. Eligibility of footwear for duty exemption under Notification No. 5/06-CE (Sl. No. 5) based on retail sale price and marking requirement.
2. Dispute regarding the requirement to print or emboss retail sale price on footwear supplied to Defence organizations.
3. Interpretation of the condition of exemption notification in relation to the Standards of Weights and Measures Act and Rules made thereunder.
4. Compliance with conditions for availing nil rate of duty under the exemption notification.
5. Justification for denial of duty exemption and imposition of penalties by the original adjudicating authority.

Issue 1: Eligibility for Duty Exemption
The judgment revolves around the eligibility of footwear for duty exemption under Notification No. 5/06-CE (Sl. No. 5) based on the retail sale price not exceeding Rs. 250 per pair and the requirement to mark the price on the footwear. The appellant companies supplied footwear to Defence organizations at a rate below Rs. 250 per pair, availing full duty exemption under the said notification. The primary contention was whether the retail sale price was indelibly printed or embossed on the footwear, a condition for the exemption. The dispute centered on the marking of the price on the footwear to qualify for the duty exemption.

Issue 2: Dispute Over Marking Requirement
The main issue was the disagreement over whether the retail sale price was marked on the footwear supplied to Defence organizations. While there was one instance where the Director of an appellant company initially stated that the price was not marked, he later retracted his statement. Apart from this isolated case, there was no evidence to suggest non-compliance with the marking condition. The Department argued that since the sales were to institutional buyers, the requirement to print the Maximum Retail Price (MRP) did not apply. However, the Tribunal emphasized that compliance with the condition of the exemption notification regarding marking the price was essential, regardless of other regulations.

Issue 3: Interpretation of Exemption Condition
The judgment delved into the interpretation of the exemption notification condition in light of the Standards of Weights and Measures Act and Rules. The Department relied on these standards to assert that MRP printing was unnecessary for sales to institutional buyers. However, the Tribunal clarified that even if the Standards of Weights and Measures Act did not mandate MRP printing for institutional sales, compliance with the exemption notification condition was obligatory. The Tribunal highlighted that fulfilling the specific conditions of the exemption notification was crucial for availing the nil rate of duty, irrespective of other regulatory requirements.

Issue 4: Compliance with Exemption Conditions
The Tribunal emphasized the importance of complying with the conditions specified in the exemption notification to avail the nil rate of duty. It underscored that even if certain regulations did not necessitate MRP printing for institutional sales, adherence to the exemption notification's conditions, such as marking the retail price on the footwear, was mandatory for claiming the duty exemption. The judgment reiterated that meeting the conditions outlined in the notification was essential for availing the concessional rate of duty.

Issue 5: Justification for Denial of Duty Exemption
The original adjudicating authority denied the duty exemption, leading to duty demands, interest under Section 11AB, and penalties against the appellant companies. The denial was primarily based on the presumption that MRP might not have been marked due to sales to institutional buyers. However, the Tribunal found no concrete evidence supporting this presumption. It ruled that the absence of proof that the appellant did not comply with the marking condition invalidated the denial of the exemption. Consequently, the Tribunal set aside the impugned orders, allowing the appeals and concluding that the denial of the benefit of exemption under Notification No. 5/06-CE (Sl. No. 5) was unsustainable.

This detailed analysis of the judgment concerning the eligibility for duty exemption under Notification No. 5/06-CE (Sl. No. 5) highlights the key issues, interpretations, and conclusions drawn by the Tribunal, emphasizing the significance of complying with specific conditions for availing duty exemptions in such cases.