2018 (12) TMI 90 - AT - Central Excise

Classification of goods - Micro Cellular Rubber Blocks - Whereas the appellants have contended that they are manufacturing Blocks, Revenue s contention is that the same are Sheets - Held that - In any case and in any view of the matter even if the goods are held to be sheets, as contended by the Revenue, the same are exempted in terms of Sr. No.39 of Notification No.3/2005-CX dated 24/02/2005 as amended. In terms of the said Serial number sheets of Micro Cellular Rubber used in the manufacture of soles, heels or soles and heels combined for footwear attract nil rate of duty. The appellants have produced on record the affidavit of their customers indicating that the goods stand used by them in the manufacture of soles or heels or both, thus establishing the use of the goods leading to the consequential relief in terms of the Notification. It is seen that Revenue has not produced any contrary evidence to the effect that the goods were not used as soles or heels for footwear. As such, even if the goods manufactured by the appellant are held to be sheets, the same would be exempted in terms of N/N. 3/2005-CX. While considering an identical Notification, Tribunal observed that in the absence of any material on record to suggest that goods cleared by the assessee were not used for making heels and soles for footwear and even if the buyers used the goods for repair of footwear, the violation of condition of Notification cannot be presumed. The demand cannot be upheld against them - appeal allowed in toto.

Summary

Issues:
Identification of appellant's product - Blocks vs. Sheets classification dispute.

Analysis:
1. The dispute in this case revolves around the identification of the appellant's product. The appellant claimed to be manufacturing Blocks classified under Heading 4008 19 10, attracting a nil rate of duty. However, the Revenue contended that the goods were actually Sheets falling under Heading 4008 11 10, attracting a 10% ad valorem duty.

2. The appellant's advocate argued that the goods manufactured were indeed Blocks, used as soles or heels by their customers. He presented invoices showing the goods as 'sole' along with sizes, emphasizing the nature of the goods as Blocks. The Revenue's argument was based on VAT documents describing the goods as sheets for VAT purposes, which the advocate clarified was due to the absence of a specific block description in the UP VAT Act.

3. The Tribunal noted that the appellant consistently identified themselves as manufacturers of Blocks in their tax invoices, with descriptions like 'sole "P" A-1'. The absence of any mention of sheets in the invoices led to the rejection of Revenue's argument. Additionally, affidavits from customers supported the appellant's claim, further strengthening their position.

4. Even if the goods were considered as sheets, the Tribunal found them exempted under Notification No.3/2005-CX, as sheets of Micro Cellular Rubber used in making soles or heels for footwear attract a nil rate of duty. The appellant provided customer affidavits confirming the use of the goods for soles or heels, which the Revenue failed to counter with contrary evidence.

5. Referring to a previous Tribunal decision, the Tribunal highlighted that unless evidence proved otherwise, the benefit of the Notification could not be denied. As the Revenue did not present any evidence contradicting the appellant's claims, the Tribunal concluded that the benefit of the Notification applied, leading to the dismissal of the demand, penalty, and confiscation of goods.

6. Ultimately, the Tribunal allowed the appeal, setting aside the impugned order and ruling in favor of the appellant, emphasizing the importance of consistent documentation and supporting evidence in determining the classification and duty applicability of manufactured goods.