By TIOL News Service

MUMBAI, OCT 14, 2016: THIS is a Revenue appeal.

The issue involved in this case is whether the footwear supplied to industries would be valued u/s 4 or u/s 4A of the CEA, 1944.

The adjudicating authority held that the footwear supplied to the industries would be valued u/s 4 on the ground that the supply made to industry is in bulk. Therefore, there is no requirement to declare the retail sale price in the bulk sale to industrial buyers.

The Commissioner (Appeals)set aside the order, both on merits as well as on limitation.

Before the CESTAT in Revenue appeal, the AR submitted that the supply of footwear is in bulk;that there is no retail sale of the footwear, therefore, the valuation of footwear is covered under Section 4 of CEA, 1944 and not in terms of MRP. Reliance is placed on the decision in Bharti Systel Ltd. - 2002-TIOL-48-CESTAT-DEL.

While supporting the order of the lower appellate authority, the respondent assessee submitted that Section 4A will apply only in such cases where it is a mandatory requirement to affix the MRP on the packages of product;that as per the clarification issued by Assistant Controller of Legal Metrology, Ahmednagar, even in the case where the supply of packaged goods are involved, the respondent is liable to affix the price on packages as per The Standards of Weights & Measures (Enforcement) Act, 1985, Section No. 33 read with The Standards of Weights & Measures (Packaged Commodities) Rule, 1977, Rule 6(i)(f), Rule 2 (r). Accordingly, the exemption provided under Rule 34 of The Standards of Weights & Measures (Packaged Commodities) Rules, 1977 is not applicable in case of footwear supplied to industries. [Liberty Shoes Ltd. - 2007-TIOL-1178-CESTAT-DEL as upheld by apex court - 2015-TIOL-325-SC-CX relied upon].

The Bench, inter alia, observed -

"5.... We find that there is no dispute in case that footwear supply in packages to the industries is not eligible for exemption provided under Rule 34 of The Standards of Weights & Measures (Packaged Commodities) Rule, 1977. If this is so, then the supplier is required to affix the MRP statutory on each package of product. When the requirement to affix the MRP on packaged goods is made under Section 4A of Central Excise Act, 1944 the valuation of the said goods shall be covered by Section 4A. It is also fact that the footwear supplier affixing the MRP on each package of each footwear, the respondent supplied to their industrial buyer. We are of the opinion that the footwear, even though the supply in bulk but in absence of exemption provided under Rule 34 of The Standards of Weights & Measures (Packaged Commodities) Rule, 1977. The valuation of footwear shall be correctly made under Section 4A and not under Section 4 of the Central Excise Act, 1944..."

Noting that the apex Court decision in Liberty Shoes Ltd. (supra) directly applies in the facts of the present case, it was held that the order passed by the Commissioner (Appeals) is just and legal and did not need any interference. The impugned order was upheld and the Revenue appeal was dismissed.