CX - Whether MRP on footwear was marked with indelible ink - Superintendent 'scratching' print made & concluding that marking was not 'indelible' - appellant producing certificates to prove otherwise - Matter remanded: CESTAT
By TIOL News Service
MUMBAI, MAY 05, 2014: THE appellant manufactured footwear and cleared the same in retail packs by printing the MRP with indelible ink and also claimed exemption as available in notification 5/2006-CE, dated 01.03.2006 as extracted below.
Table
|
S.No.
|
Chapter or
heading or sub heading or tariff
item of the First
Schedule
|
Description of excisable goods
|
Rate
|
Condition No.
|
|
(1)
|
(2)
|
(3)
|
(4)
|
(5)
|
|
5
|
64
|
The following goods, namely:-
(a) Footwear of retail sale price not exceeding Rs.250 per pair
(b) Footwear of Retail Sale Price exceeding Rs.250 and not exceeding Rs.750 per pair
Explanation.- "Retail Sale Price means the maximum price at which the excisable goods in packaged form may be sold to the ultimate consumer and includes all taxes, local or otherwise, freight, transport charges, commission payable to dealers, and all charges towards advertisement, delivery, packing, forwarding and the like, as the case may be, and the price is the sole consideration for the sale.
|
Nil
8%
|
2
2
|
|
Condition
2. This exemption shall apply only to such footwear on which the retail sale price is indelibly marked or embossed on the footwear itself.
|
The Revenue doubted as to whether the MRP shown on the 'footwear' was 'indelibly marked'.So, the department conducted Panchanama proceedings with respect to the footwear manufactured by the appellant wherein the MRP was printed with white ink on the inner side of the tongue of the shoe and for the PVC Gumboots, the said marking was embedded in the mould itself. The appellant claimed that the printing made on the tongue of the shoe is with indelible printing ink.
Not happy with this explanation, the Superintendent verified the marking by scratching the print made and based on the "scratching" done, he came to the conclusion that the marking was not indelible.
The Director of the firm who was a witness to the Panchanama proceedings mentioned that the marking was indelible and the lining was damaged on account of scratching and the printing was damaged.
But the Superintendent was confident about the results obtained by him from the scratching exercise - a SCN was issued to the appellant to deny the benefit of the exemption Notification and thereafter, the impugned demand was confirmed by the original authority.
Apart from upholding the CE demand of Rs.3,46,414/-, equivalent penalty and interest, the Commissioner(A) also upheld the penalty imposed of Rs.25,000/- on the Director of the appellant firm.
When the case was heard by the CESTAT on 10.02.2014, the Bench had directed the appellant to lead evidence regarding the quality of the material used for printing.
In response to such directions, the appellant produced before two certificates - One from the Indian Institute of Packaging (IIP) dated 28.02.2014 where the samples have been tested for Abrasion loss and Scuff Proofness. In the said certificate, it has been certified that on the test samples submitted by the client, testing has been done and no smudging was observed and the abrasion loss is 'nil'. Another sample was sent to the National Test House (NTH) at Mumbai and said certificate dated 27.02.2014 clearly records the test result as 'Fastness to dry rubbing for 10 cycles (Crock meter with abrading member of cotton cloth at RT) and "visually, no colour fading observed and the printing is readable".
The Bench observed that these two certificates indicated that the printing done by the appellant on the footwear was indelible and, therefore, the appellant was entitled to the benefit of the said exemption. However, since these certificates were not produced before the adjudicating authority and the appellate authority, the CESTAT found it prudent to remand the matter to the adjudicating authority for reconsidering the matter afresh and accordingly directed the appellant to submit the test results to the said authority. And since the matter was being remanded no pre-deposit was ordered.
It was also mentioned - For any reason, if the department feels that the samples drawn by the appellant himself is not acceptable, they are at liberty to draw samples and send it to NTH, Mumbai and satisfy whether the printing is indelible or not.
In fine, the appeal was allowed by way of remand.
In passing: "You scratch my back, I'll scratch yours."
(See 2014-TIOL-697-CESTAT-MUM)
