Customs, Excise and Gold Tribunal - Tamil Nadu
Farida Classic Shoes Ltd. vs Cce on 22 February, 1999
Equivalent citations: 1999(83)ECR869(TRI.-CHENNAI), 2000(123)ELT748(TRI-CHENNAI)
ORDER V.K. Ashtana, Member (T)
1. This is an appeal against the order in original No. 26/91 dated 2.8.1991 passed by the Additional Collector of Central Excise, wherein duty demand of Rs. 1,98,742.37 has been confirmed and penalty of Rs. 5,000/- imposed under Rule 173Q. Basically show cause notice dated 11.2.1991 adjudicated upon by this order impugned had alleged two violations i.e. (a) that the appellants while manufacturing heels of footwear falling under sub-heading 6401.91 claimed exemption under Notification 49/86 had wrongly claimed exemption because soles attached to heels are made of not only wood or leather but were attached with synthetic rubber also at the bottom by using adhesives and compression. Since exemption Notification 49/86 is applicable to soles and heels combinedly made of wood or leather and since in this even rubber sheets has been affixed thereon, therefore, exemption in the same notification will not be available; (b) Second issue involved is that the appellants have illegally despatched number of shoes without punching in the soles to their Head Office at Madras under despatch slips for onward transmission to foreign buyers as samples, and these samples were not returned to the factory. However, according to Notification 171/70 dated 21.11.1970 samples for export business were exempted provided these would not exceed three pairs of shoes or three odd pieces provided further that soles thereof are punched. According to Annexure A to the show cause notice, duty involved on such sample shoes is Rs. 57,433.35 and the duty involved for denial of exemption for heels and heels with soles affixed with rubber sheet is Rs. 1,41,309.
2. Shri KM Vadivelu, learned Consultant appeared for the appellants and Shri S. Sankaravadivelu, DR for the Revenue.
3. The learned Consultant submits that as far as the issue of procedural violations in case of samples is concerned, the appellants do not desire to press the issue any further. However, as far as confirmation of duty amount on heels and heels with soles affixed with rubber sheets is concerned, he submits that the wording of the Notification, nowhere used the word "exclusive" or "only" or "alone". Therefore, as long as these items are predominently made up of wood or leather, a fact which is not disputed, mere affixing of rubber sheets on the part of the heel portion would not result in denial of the duty exemption. In this respect he cites the decision of the Tribunal in the case of Indian Organic Chemicals v. CCE, Madras as reported in 1998 (35) ELT 535 : 1988 (16) ECR 570 (T) wherein while considering the purport of the Notification No. 16/82-CE dated 14.2.1982 Tribunal had held that since words 'alone, entirely or exclusively' were not expressly mentioned therein, therefore, it would not be correct to read into the Notification such conditionality. The learned Consultant says that in the subject Notification none of these words appear and therefore, the restrictive approach of the department leading to confirmation of duty is not legally correct. He also cites the decision in the case of Guest Keen Williams Ltd. v. CCE, Calcutta as wherein it was held that when steel ingots were manufactured from specified materials specified in certain Notifications, but also had admixed with certain other materials to a small extent, exemption contained in that Notification shall not be denied. Learned Consultant further cites decision of the Supreme Court in the case of Aluminium Corporation of India Ltd. v. Union of India and Ors. as reported in 1978 ELT (J452) : 1975 Cen-Cus 111C (SC) : ECR C 466 SC wherein same principle had been laid down in respect of goods manufactured partly out of non duty paid and partly out of duty paid material. The Hon. Apex Court had held that if the Notification does not exclude altogether manufactures made partly out of duty paid and partly out of non duty-paid crude, then exemption cannot be denied. The learned Consultant submits that the principle involved in this decision is akin to that involved in this case.
4. Shri Sankaravadivelu, learned DR submits that the duty amount as calculated for the two violations alleged and as noted above have been checked and appear to be arithmetically correct in terms of the Annexure A to the show cause notice. He also reiterates the impugned order.
5. We have carefully considered the rival submissions and records of the case. We have seen the wordings contained in the exemption Notification 49/86-CE dated 10.2.1986, as amended, which provides unconditional exemption to component parts of footwear, inter alia, heels and soles and heels combinedly made up of wood or leather under serial No. 1 thereof. A perusal thereof shows that the aforesaid description has to be viewed widely as the words 'exclusive, wholly or alone' etc. are not contained in this Notification with respect to these products. This interpretation has to be adopted in view of the decisions cited by the learned Consultant, wherein the principles enunciated by both the Tribunal and the Hon. Apex Court is that when no exclusivity is contained in the wordings of the Notification mere presence of some quantity of material or of any other material not mentioned in the Notification would not lead to denial of the exemption contained therein provided the rest of the materials conform to the description contained therein for which unconditional exemption from duty was prescribed therein. Therefore, respectfully applying the ratio of these decisions to the facts of the present case, we find that mere presence of material i.e. of the rubber sheets affixed to the heel portion of the heels and soles cleared by the appellants which were admittedly made up of combination of wood and leather would not deny the exemption contained in the said Notification.
6. We also find that the learned Consultant puts it on record that as far as non-punching of sample shoes cleared and not returned to the factory is concerned, the appellants do not wish to press this part of their appeal before us. We accept this contention.
7. In view of the aforesaid analysis we find that portion of the order in original impugned which confirms duty with respect to the said exemption Notification concerning heels and heels with soles is concerned, needs to be set aside and exemption allowed under this appeal. However, in view of the appellants not pressing the violation with respect to sample shoes cleared, there is no need to interfere with the confirmation of duty amount of Rs. 57,433.35 out of the total amount confirmed in the order in original impugned. Further, in view of the fact that substantive portion of duty demand has been now set aside as noted above, we also find it proper to reduce the penalty amount from Rs. 5,000/- to Rs. 2,000/- (Rupees Two thousand). Ordered accordingly. The appeal succeeds partially with consequential relief as ordered above.
(Dictated and pronounced in open Court).