2016 (9) TMI 933 - AT - Central Excise

Valuation - manufacture of Footwears falling under Tariff sub-heading No. 64041910 of CETA, 1985 - availment of benefit of Notification No. 6/2002-CE, dated 01-03-2002 - whether the goods manufactured were to be assessed under Section 4 of Central Excise Act, 1944, and as provided under Chapter V of the Weights and Measures (Packaged Commodity) Rules, 1977 or under Section 4A of Central Excise Act, 1944. Held that - it is found that in the said Notification, the condition required to be fulfilled was that the Footwear did not have a retail sale price exceeding ₹ 125/- per pair till 8/7/2004, and did not have retail sale price exceeding ₹ 250 per pair w.e.f. 9/7/2004 and that the retail sale price was defined in the said notification as the maximum price at which the excisable goods in the packaged form are sold to the ultimate customers and the price to be the sole consideration for such sale. We also find that in show cause notice it is contended by Revenue that MRP was printed by M/s N.G. Enterprises on the goods itself intentionally to take the undue benefit of Notification just to evade Central Excise duty. Also it is stated that from the statements of Shri Vishal Gupta and Shri Pawan Chadha, it is confirmed that they had received the said Footwear in wholesale bulk quantity and no MRP was printed on the Footwears received from M/s N.G. Enterprises and both the statements are relied upon documents for the issue of said show cause notice. It is found that there are contrary contentions by Revenue. We further, find that the show cause notice has failed to established either the facts that the MRP more than requirement in the Notification was printed on Footwear or the retail sale price was not the sole consideration for sale or the goods were sold at the price higher than the retail sale price declared by them for the relevant period. It is clear from the submissions of the appellant that the appellant has fulfilled all the conditions required for availing benefits of the notifications stated in foregoing paras. We, therefore, hold that the three show cause notices dealt with in seven appeals in hand are not sustainable. Therefore, we set aside all the impugned orders by holding that for the period covered under the said show cause notices impugned goods were eligible for benefit of such Notification stated in the earlier paragraphs. - Decided in favour of appellant

Summary

Issues:
- Interpretation of exemption notification under Central Excise Act, 1944
- Assessment under Section 4 vs. Section 4A of Central Excise Act, 1944
- Requirement of declaring retail sale price and MRP on goods
- Allegations of misusing exemption provisions
- Imposition of penalty and interest
- Personal liability of authorized signatory

Interpretation of Exemption Notification:
The case involved seven appeals regarding the interpretation of exemption notifications under the Central Excise Act, 1944, for a firm engaged in manufacturing Footwears. The appellant claimed eligibility for exemption under various notifications based on specific conditions related to the retail sale price of the goods. The Original Authority held that the goods should be assessed under Section 4, and the appellants were not required to print MRP on the goods. However, the appellants argued that they met all conditions for exemption as per the notifications.

Assessment under Section 4 vs. Section 4A:
The dispute centered around whether the goods should be assessed under Section 4 or Section 4A of the Central Excise Act, 1944. The Original Authority concluded that Section 4 applied, while the appellants contended that Section 4A should be applicable. This distinction was crucial in determining the eligibility for the exemption notifications.

Requirement of Declaring Retail Sale Price and MRP:
The case highlighted the importance of declaring the retail sale price and MRP on goods for availing of exemption benefits under the relevant notifications. The dispute arose from allegations of misusing the exemption provisions by wrongly interpreting the requirements and availing the benefits inappropriately.

Allegations of Misusing Exemption Provisions:
The Revenue alleged that the appellant firm was misusing the exemption provided under the notifications by misinterpreting the provisions and not complying with the conditions specified. The show cause notices raised concerns about the eligibility of the goods for the exemption and proposed the demand for Central Excise duty, penalty, and interest.

Imposition of Penalty and Interest:
Apart from the demand for Central Excise duty, there were proposals to impose penalties and charge interest on the appellant firm. The Original Authority confirmed the demand, imposed penalties, and even proposed personal liability on the authorized signatory of the firm, adding a layer of complexity to the case.

Personal Liability of Authorized Signatory:
The case also involved the imposition of personal liability on the authorized signatory of the firm, Shri Shobhit Khandelwal. This aspect raised questions about individual accountability in cases of alleged misuse of exemption provisions and non-compliance with Central Excise regulations.

In conclusion, the Appellate Tribunal, after considering the arguments and evidence presented, found that the show cause notices and impugned orders were not sustainable. They held that the goods were eligible for the benefits of the exemption notifications as the appellants had fulfilled all the required conditions. Consequently, all seven appeals were allowed, and the appellants were entitled to any consequential relief.