2018 (2) TMI 1239 - AT - Central Excise

Benefit of N/N. 5/2006 (Sl. No. 5) dated 01/03/2006 - Footwear - denial of benefit of notification on the ground that the appellant had manufactured and cleared footwear without embossing the MRP on such footwear - Held that - The condition specified for the exemption to footwear of MRP less than ₹ 250/- per pair is that the footwear needs to be sold with the MRP embossed. During investigation, it stands established that the goods manufactured and cleared were never embedded with the MRP. In fact no embossing machine was found in the factory during the course of search. The argument raised by the appellant is that this condition cannot be viewed as a substantial condition for the benefit of the notification. She has argued that the substantial condition is that the exemption is applicable only to footwear which are of MRP less than ₹ 250/- per pair. The market enquiry conducted by Revenue has, in fact confirmed, that the MRP of the footwear manufactured and sold by the appellant is never more than ₹ 250/- per pair - the substantial condition of the notification is satisfied by the appellant and hence the benefit should be extended to them. The exemption in the present case is required to be extended to the appellant, in as much as the substantial condition of MRP of the footwear has been satisfied even though the condition regarding the indelibly embossing the MRP has not been satisfied - reliance placed in the case of BOMBAY CHEMICAL PVT. LTD. Versus COLLECTOR OF CENTRAL EXCISE, BOMBAY 1995 (4) TMI 59 - SUPREME COURT OF INDIA . Benefit of captive consumption - shoe uppers - Held that - the appellant has one factory where the shoe uppers have been manufactured which are captively consumed in the other factory in the manufacture of the footwear - once the benefit of exemption is granted to the footwear, the benefit of captive consumption for shoe uppers cannot be extended. Appeal allowed in part.

Summary

Issues:
- Eligibility for benefit of Notification No. 5/2006 (Sl. No. 5) regarding exemption of footwear below MRP of ?250 per pair due to absence of MRP embossing.
- Interpretation of substantial conditions of the notification and applicability to the case.
- Comparison with relevant case laws.
- Consideration of market enquiry results.
- Impact on duty demand and confiscation of goods.

Analysis:
The appellants filed appeals against Order-in-Original No. 44/D-I/2015, challenging the denial of exemption under Notification No. 5/2006 (Sl. No. 5) dated 01/03/2006 due to non-embossing of MRP on footwear sold below ?250 per pair. The Department alleged that the appellants failed to satisfy the condition of indelibly marking the MRP on the footwear, leading to duty demand and confiscation of goods seized during a search. The Adjudicating Authority upheld the duty demand, prompting the appeals.

During the hearing, the Counsel for the appellants argued that while the MRP embossing condition was not met, the actual selling price of the footwear did not exceed ?250 per pair. Citing case laws like Bombay Chemical Pvt. Ltd. and Union of India vs. Suksha International, the Counsel contended that the substantial condition of MRP pricing was fulfilled, justifying the exemption. Conversely, the Revenue's representative supported the impugned order, emphasizing the importance of adhering to the notification's conditions.

After examining the arguments and records, the Tribunal focused on whether the appellants were entitled to the notification's benefit despite the absence of MRP embossing. They noted that the critical condition was the MRP of footwear being below ?250 per pair, which was confirmed by market inquiries. Relying on the principle of strict construction of exemption notifications, the Tribunal found that the appellants satisfied the essential condition, warranting the extension of the benefit.

Referring to the decision in Bombay Chemical Pvt. Ltd., the Tribunal emphasized that once a good falls within the exemption category, it should be construed broadly. Consequently, they ruled in favor of the appellants, setting aside the duty demand on shoe uppers but upholding it on other grounds. The confiscation of seized goods and currency was annulled, along with personal penalties imposed on the appellants, resulting in a partial allowance of the appeals.

In conclusion, the Tribunal modified the impugned order based on the interpretation of the notification's conditions, market inquiry results, and relevant case laws, ultimately granting the appellants partial relief while upholding certain duty demands.