2023 (10) TMI 1161 - AT - Central Excise

Clearance of footwear (not intended for retail sale) - denial of benefit under N/N. 12/2012-CE dated 17.03.2012 (Entry No.180) - denial of benefit on the ground that the goods cleared are not intended for retail sale - applicability of Section 4 or Section 4A of Central Excise Act, 1944 - Penalty of Rs.25 lakhs on the Secretary Shri Ajay Agarwal. The stand taken by the revenue is that since the goods were cleared to institutional buyers, provisions of Legal Metrology (Package Commodities) Rules, 2011 were not applicable in the present case and therefore, assessment should be as per provisions of Section 4 of Central Excise Act, 1944. HELD THAT - The issue is no more res-integra and the Hon ble Supreme Court in CCE, Panchkula Vs M/s Liberty Shoes Ltd. 2015 (12) TMI 1159 - SUPREME COURT has held that Once we find that the footwear is an item which is specified under Section 4A, which is covered by Weights and Measures Act and Rules, and MRP was fixed on the products supplied, which were not exempted under Rule 34 of the Rules, the provision of Section 4A of the Act shall stand attracted. It is found that retail sales price was embossed on footwear supplied to Arm Forces and Paramilitary forces. Therefore, by respectfully following the judgement of Hon ble Supreme Court in the case of CCE, Panchkula Vs M/s Liberty Shoes Ltd. the assessment would be under the provisions of Section 4A of the Central Excise Act, 1944. Penalty of Rs.25 lakhs on the Secretary Shri Ajay Agarwal - HELD THAT - Since the entire demand against the main Appellant is found to be unsustainable, the penalty imposed on the Appellant No.2 cannot be justified. Accordingly, the same is set aside. The impugned order cannot be sustained and is accordingly set aside - Appeal allowed.

Summary

Issues involved:
The dispute in the present appeal is regarding the applicability of Section 4 or Section 4A of the Central Excise Act, 1944 for determining the assessable value of footwear supplied in bulk to armed forces and paramilitary forces. The main issue revolves around whether the goods supplied to institutional buyers are subject to the provisions of Legal Metrology (Package Commodities) Rules, 2011, and thus assessed under Section 4, or if they should be assessed under Section 4A based on the embossed retail sales price (RSP) on the footwear.

Details of the Judgment:

Issue 1: Applicability of Section 4 or Section 4A of the Central Excise Act, 1944
The appellant, a manufacturer and trader of various items including shoes, was alleged to have supplied footwear to Defence/paramilitary forces without payment of appropriate Central Excise duty. The Department contended that the benefit of a specific notification was not available to the appellant as the goods were not intended for retail sale. The Department argued that the appellant incorrectly determined the value for payment of Central Excise duty under Section 4A, which was not applicable as sales to defence/paramilitary forces were considered sales to institutions for their own use and not for retail sale. However, the appellant argued that the RSP was marked on the shoes, indicating compliance with the relevant notification, and that the demand was time-barred. The Tribunal, following the decision of the Hon'ble Supreme Court in a similar case, held that since the RSP was embossed on the footwear supplied to armed forces and paramilitary forces, the assessment should be under the provisions of Section 4A of the Central Excise Act, 1944.

Issue 2: Penalty Imposed on the Secretary
The Tribunal found that since the demand against the main appellant was deemed unsustainable, the penalty of Rs.25 lakhs imposed on the Secretary of the appellant firm could not be justified. Therefore, the penalty was set aside.

Conclusion:
The Tribunal set aside the impugned order and allowed the appeals filed by the appellants with consequential relief, in accordance with the law.