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TMI Blog2017 (5) TMI 179X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The brief facts of the case are the appellant is engaged in the manufacture of footwear under the brand name of Liberty. The appellant is also undertaking packing/repacking and labelling/re-labelling of imported footwear. This activity of packing/repacking and labelling/re-labelling of the goods amounts to manufacture as per section 2(f) (iii) of the Central Excise Act, 1944. During the period of dispute, the process of packing/repacking and labelling/re-labelling of containers or adoption of any other treatment to render the footwear marketable to the consumer were exempted from the duty under Notification No.6/02-CE dated and 5/06-CE dated 1.3.2006. The said exemption was subjected to certain specified conditions of the said notifications. The said notification exempts footwear subjected to only one or more of the following processes, namely: (i) packing/repacking (ii) and labelling/re-labelling of the containers (iii) adoption of any other treatment to render the footwear marketable to the consumer. The notification further provides for the condition that the footwear should have been: (i) bearing a brand name or trade name of any person, (ii) in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... products in terms of Rule 6 (1) of Cenvat Credit Rules for the period November, 2004 to June, 2005, the appellant is liable to pay an amount 10% of the exempted goods in terms Rule 6 (3) (b) ibid. The show cause notice was adjudicated and the demand proposes in the show cause notice was confirmed alongwith interest and penalties were also imposed. Aggrieved with the said order, the appellant is before us. 4. Learned Counsel for the appellant submits that the exemption provided under Notification No.6/02-CE dated 1.3.2002 and 5/06-CE dated 1.3.2006 on the footwear manufactured by the appellant is optional and bar of section 5A of the Act is not applicable. Thus, the appellant has option to duty, the credit cannot be denied to the appellant. To support her contention, she relied on the decision of the Tribunal as well as High Court of Bombay: (i) Balkrishna Paper Mills Ltd. Vs. CCE, Thane-2015 (329) ELT 468 (Tri.-Mum.) (ii) Padmavati Pulp and Paper Mills Vs. CCE, Thane-2015-TIOL-2434-CESTAT- MUM (iii) Indian Seamless Metal Tubes Ltd. Vs. CCE, Pune-III-2013-TILO-2208-CESTAT-MUM (iv) Mahindra and Mahindra Ltd. Vs. CCE, Mumbai-2015 (321) ELT 51 (Bom.) (v) Arvi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) (b) of Cenvat Credit Rules, the demand is not sustainable. To support this contention, she relied on the following decisions: (a) Chandrapur Magnet Wires (P) Ltd. -1996 (81) ELT 3 (SC) (b) Hello Minerals Waters (P) Ltd.-2004 (174) ELT 422 (All.) (c) Dr. Writer's Food Products Pvt. Ltd-2009 (Tri.-Mum.) (d) CCE, Mangalore vs. Kuremukh Iron Steel Co-Ltd.-2011 (271) ELT 192 (kar.) (e) CCE, Ahmedabad s. Maize Products-2009 (234) ELT 431 (Guj.). 8. It is her further submission that as no demand is sustainable, the education cess is not payable by the appellant. It is submitted that the show cause notice has been issued by invoking the extended period of limitation, therefore, the demands for the extended period of limitation are not sustainable. The penalty is also not imposable on the appellant. 9. On the other hand, learned AR reiterated the findings of the impugned order. 10. Heard both sides and considered the submissions. 11. On careful consideration of the submissions, the following issues emerge: (1) Whether as per section 5A (1A) of the Act, the appellant is duty bound not to pay duty under Notification No.6/02-CE dated 1.3.2002 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... either absolutely or subject to such conditions (to be fulfilled before or after removal) as may be specified in the Notification from the whole or any part of the duty. Further, a reading of Section 5A(1A) shows that for the removal of doubts, it is hereby declared that where an exemption under subsection (1) in respect of any excisable goods from the whole of the duty of Excise leviable thereon has been granted absolutely, the manufacturer of such excisable goods shall not pay the duty of Excise on such goods. Thus, a bare reading of the above Section indicates that a manufacturer will not have an option to pay the duty only where the goods Are exempt and the exemption granted is absolute. 14. We hold that the benefit of notification is optional to the appellant and the appellant is not entitled to avail the benefit of notification, in that circumstance, it cannot be said that the goods are exempted goods. As we have held that the goods are not exempted goods, therefore, the appellant has correctly paid duty on the said goods, consequently, the credit cannot be denied to the appellant. Therefore, we hold that the demand of ₹ 1,96,83,096/- is not sustainable. The same i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et aside the demands proposed in the show cause notice are not sustainable against the appellant. Consequently, the impugned order is set aside and the appeal is allowed with consequential relief, if any. Per: Devender Singh, Member (T) ORDER 18. Having gone through the order recorded by Ld. Brother Member (Judicial) Mr. Ashok Jindal, I agree with the Ld. brother on issue No.1. However, I am unable to agree with my Ld. brother on issue No.2. Hence, I am recording a separate order in relation to issue No.2 in relation to demand pertaining to inadmissible credit. 19. The demand of ₹ 47,84,763/- has been raised on the ground that the noticee was manufacturing both dutiable footwear and imported exempted footwear and they were using common inputs such as packing material as well as input services in both types of footwear without maintaining the separate records. The contention of the appellants is that the exempted and dutiable goods were not manufactured by the appellants in the same premises and the inputs in the form of packing material were received separately in respective godowns. In respect of input services, it is submitted that the appellant has avai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -CE at. 01.03.2002, as amended, in Karnal unit, while the benefit of above Notification was availed in their Godown at Sector-5, Namastey Chowk, Karnal. However, all the functions relating to imported footwear including receipt and dispatches are carried out on behalf of M/s LSL, Karnal at registered premises as well as Godown at Namastey Chowk. In view of the above, the appellant's submission that such packing material was received at respective godowns is incorrect. In this context, I also find that the following finding of the adjudicating authority is not rebutted by the appellants. they have not produced any private or statutory record required to maintain under Central Excise Law or other taxes of state in evidence to their submission such as input stock register, unpacked/ unlabelled imported footwear stock account and packed/relabeled finished footwear stock account in respect of exempted footwear repacked/relabeled at their respective godowns. 20. As for the credit on input services used by the appellants, they have admitted that they have availed credit on input services commonly used by them for manufacture of dutiable footwear and exempted footwear and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with an intent to evade the duty. 34. In our opinion, the facts of the present case clearly suggest willful suppression of material facts by the assessee as well as contravention of the provisions of the Act and rules framed thereunder with an intent to evade the demand of duty as would be covered by Clauses IV and V of Section 11A(1) of the Act, 1944. Therefore, the invocation of the extended period of limitation in the facts of the present case is fully justified. 23. As for demand of Cess @ 2% in the order of adjudicating authority, though the same has not been demanded in show cause notice, it is a consequence of law and therefore should not escape realization. 24. In view of the above, I find no infirmity in the order of the ld. adjudicating authority confirming the duty in relation to inadmissible Cenvat Credit on inputs and the same is upheld along with education cess and interest thereon and equivalent penalty under Rule 15 read with Section 11AC. As these figures are not coming out separately for inputs from the record, the same need to be worked out and informed to the appellants. For that exercise of quantification, the matter is remanded to the adjudication ..... X X X X Extracts X X X X X X X X Extracts X X X X
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