Custom, Excise & Service Tax Tribunal
Cce-Delhi vs Shri Amit Gupta, Partner on 28 May, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
R.K. PURAM, WEST BLOCK NO.2, NEW DELHI-110066
COURT NO. III
Date of hearing: 28/05/2015
Appeal No. E/2981 and 2982/2010-EX [DB]
[Arising out of order-in-appeal no. 104-105/CE/DLH/2010 passed by CCE-Delhi]
1.
Whether Press Reporter may be allowed to see the Order for Publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2.
Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3.
Whether their Lordships wish to see the fair copy of the order?
4.
Whether order is to be circulated to the Department Authorities?
CCE-Delhi Appellant
Vs.
The Heels,
Shri Amit Gupta, Partner Respondent
Appearance: Shri M.S. Negi, DR for the appellant.
Shri J.P. Kaushik, Advocate for the respondent.
Coram: Honble Shri Rakesh Kumar, Member (Technical) Honble Mrs. Sulekha Beevi C.S., Member (Judicial) Final Order No. 51957-51958/2015 Per: Rakesh Kumar The facts leading to filing of these appeals by the Revenue are, in brief, as under:
1.1 The appellant have two shops with the name The Heels, one shop in Connaught Place and the second shop in Pitampura, Delhi. From these shops, three types of trading is done. The first type of trading is purchasing of branded shoes of other persons brands with MRP declared and which are sold as such without any change of the MRP. This activity has been treated as pure trading activity not amounting to manufacture. The second type of trading is in respect of shoes which they get from shoe makers without brand name and without MRP. These shoes are received in Unit containers. In respect of these shoes, the respondent put their brand name The Heels and also MRP. Though this activity has been treated as manufacture in terms of section 2f (iii) of Central Excise Act, there is no duty demand in respect of these shoes because sales turn over such shoes is within SSI exemption limit and as such the show cause notice does not demand any duty in respect of the sale of the shoes under the brand name Heels. The third type of trading activity involves purchase of shoes of different brands packed in unit containers. In respect of these shoes, according to the respondent, they put their own MRP sticker on the shoes instead of putting the MRP on the boxes. The department has treated this activity as manufacture which is not exempt under the SSI exemption (as the shoes bear the brand name of other person) and it is on the sale of these shoes that the duty of Rs. 15,01,845/- has been demanded for the period from 2004-2005 to 2007-2008 by issue of show cause notice dated 9/9/2008. The show cause notice besides demand of duty from the appellant along with interest under section 11AB and imposition of penalty on it under section 11AC has also sought imposition of penalty under Rule 26 of the Central Excise Rules, 2002 on Shri Amit Gupta, partner of the appellant firm. This show cause notice was adjudicated by the Additional Commissioner vide order-in-original dated 25/09/2009 by which the above mentioned duty demand was confirmed against the respondent firm along with interest on it under section 11AB and besides this while penalty of equal amount, i.e., Rs. 15,01,845/- was imposed on the respondent firm under section 11AC and penalty of Rs. 3,20,000/- was imposed on Shri Amit Gupta under Rule 26 of the Central Excise Rules, 2002. Since during investigation, certain stock of shoes had been placed under seizure, the same were also ordered to be confiscated with option to be redeemed on payment of redemption fine in lieu of confiscation. By this order, the amount of Rs. 25 lakh deposited by the appellant firm during investigation was also appropriated against duty demand of Rs. 15,01,845/- confirmed against it along with interest under section 11AB and also imposed penalty on Shri Amit Gupta as well as on the firm. On appeal being filed to Commissioner (appeals) against this order-in-original, the Commissioner (appeals) vide order-in-appeal dated 9/6/2010 allowed the appeal and set aside Additional Commissioners order holding that the activity of the respondent of putting MRP stickers on the footwear and not on the containers of the shoes of different brand received from various dealers in packed conditions would not amount to manufacture. He in particular, held that the provisions of section 2f (iii) with regard to declaration or altering of retail sale price would be applicable only when the MRP is declared or altered on the unit containers in which goods have been packed. Against this order of the Commissioner, Revenue is in appeal 1.2 The Commissioner (appeals) also accepted the alternate plea of the respondent that even if their activity amounts to manufacture, they would be eligible for the SSI exemption as the brand name owners have not been identified by the Revenue. Against this order of CCE (appeals), this appeal has been filed by the Revenue.
2. Heard both the sides.
3. Shri M.S. Negi, ld. DR, assailed the impugned order by reiterating the grounds of appeal in the Revenues appeal and pointing out to the statements of various person pleaded that the MRP stickers were being put on the containers and not on the footwears themselves and accordingly, the activity of the respondent would amount to manufacture. Shri Negi also pleaded that even if the respondents plea that they were putting the MRP by putting MRP stickers on the footwear by opening the containers, is accepted, their activity would amount to re-packing and hence, the same would be covered by section 2f (iii). With regard to the point as to whether the brand names on the shoes alleged to have been manufactured in terms of section 2f (iii) belong to other persons, Shri Negi, pleaded that in respect of the brand name Ben Sharman and Hitz, Shri Pawan Garg, proprietor of M/s. Garg Footwear in his statement dated 2/5/2008 has categorically stated that they were procuring the Ben Sharman and Hitz Brand shoes from M/s. Popsons International-Agra who were the manufacturers and accordingly it was pleaded that these brands belong to M/s. Popson International. It was, therefore, pleaded that the impugned order is not correct.
4. Shri J.P. Kaushik, Advocate, ld. Counsel for the respondent, pleaded that firstly, para 11, 12 and 13 of the show cause notice itself accepts that in respect of the packed shoes of other brand being received by the respondent, the MRP stickers were being put on the footwear and not on the containers of the footwears and when this is stated position in the show cause notice, the activity of the respondent would not amount to manufacture, as in terms of section 2f (iii), in relation to the goods specified in third schedule, packing or re-packing of such goods in unit container or labeling or re-labelling of containers including declaration or alteration of RSP on in it or any activity which would render the product marketable to the consumers would amount to manufacture; that from the language of section 2f (iii), it is clear that with regard to the declaration of MRP or alteration of the MRP, the same should be on the unit container in which the goods had been packed, while in the present case, the MRP sticker was put on the footwear and not on the boxes containing the footwear.
4. Shri Kaushik, Advocate, the learned counsel for the respondent further pleaded that even if the departments stand that MRP sticker on the footwear were being put on the containers of the footwear and not on the footwear themselves is accepted, the process undertaken would not amount to manufacture, in view of the fact that the shoes were received in packed condition and not in loose condition and in this regard, he relies upon the Tribunals judgment in the case of Rafique Mallick Vs. CCE-Mumbai-I reported in 2006 (193) ELT 200 (Tri-Mumbai) and also in the case of Amin Virji Vs. CCE-Mumbai-I reported in 2014 (301) ELT 699 (Tri.- Mumabi); that With regard to the question as to whether the SSI Exemption would be available, he supports the finding of the Commissioner (appeals) that the brand name owners have not been identified and hence, respondent cannot be said to be using the brand name of other persons and in this regard, he relies upon the Tribunals judgment in the case of Ample Industries & Ors. Vs. CCE-Rajkot reported in 2007 (83) RLT 572 (CESTAT-Ahbad.) and in the case of CCE-Cochin Vs. Geo Engineering Works reported in 2004 (165) ELT 463 (Tri.-Bang.) wherein it was held that when the same brand name was being used by many manufactures and the statutory certificate of ownership the brand name of person who was alleged to be the owner thereof was not to be produced by the Revenue, it cannot be presumed that the impugned brand name used by the assessee belongs to another person and benefit of SSI exemption can not be denied.
5. We have considered the submissions from both the sides and perused the records.
6. The respondent are a partnership firm of which Shri Amit Gupta is a partner. They have two shops-one shop at Connaught Place, New Delhi and the other shop at Pitampura - New Delhi. They are engaged in trading activity. The trading activity of the respondent is of three types. The first type of trading activity is of buying the branded shoes from various manufacturers/dealers on which MRP of those manufacturers is already affixed and selling the same at the declared MRPs. In these cases, there is no re-packing or labeling or re-labelling or change of MRPs is involved and as such there is no dispute that this activity does not amount to manufacture in terms of section 2f (iii) of the Central Excise Act, 1944. The second type of trading activity of the respondent is that they purchased unbranded shoes from various shoe manufactures which are packed in unit containers. The containers do not have any label mentioning the brand name and MRP. In respect of such footwears, the respondent put their labels on the containers, with their brand names and MRP prints on them. In respect of this activity, there is no dispute that the same is covered by section 2f (iii) and would amount to manufacture. However, there is no duty demand in respect of this sale of the shoes, as the sales turn over of such shoes during each financial year is within the SSI exemption limit.
7. The third type is of trading activity, which is the subject matter of dispute, involves purchasing of footwears in unit containers bearing brand name like Ben Sharman, Hitz, etc.. The shoes are received in unit containers with brand name declared on the containers but without any MRP. According to the department, in respect of these footwear, the respondent put their MRP sticker on the containers themselves. According to the respondent, the MRP stickers are put on the footwear and not on the container and in this regard, the respondent point out to para 11, 12 and 13 of the show cause notice from which it appears that the MRP stickers were being put on the footwears and not on the containers. The Commissioner (appeals) has held that the MRP stickers were being put on the footwear and not on the containers, and therefore, this activity would not amount to manufacture under section 2F (iii). However, even if it is accepted that the MRP stickers were being put on the containers and not on the footwear and the activity amounts to manufacture, in our view, since the brand name owners of the brand names affixed on the containers had not been identified in the sense that the statutory certificate of the ownership of the brand name of the person who had been alleged to be the owner of the brand names have not been produced by the Revenue, in view of the judgment of the Tribunal in the case of CCE-Cochin Vs. Geo Engineering Works (supra) benefit of SSI exemption cannot be denied. There is no dispute that the sales turn over of the third category of footwear along with the sales turn over of the footwear bearing the respondents own brand name was within the SSI exemption limit during each of the three financial year. In view of this without going into the question as to whether the activity of the respondent amounted to manufacture or not, we hold that the even if it is treated as manufacture, they would be eligible for SSI exemption, there would be no duty demand. Accordingly we do not find any merit in the appeals filed by the Revenue. The same are dismissed.
(Rakesh Kumar) Member (Technical) (Sulekha Beevi C.S.) Member (Judicial) Ritu 8