Customs, Excise and Gold Tribunal - Tamil Nadu
Affan Shoes (P) Ltd. vs Commissioner Of Central Excise on 1 August, 2000
Equivalent citations: 2000(122)ELT868(TRI-CHENNAI)
ORDER S.S. Sekhon, Member (T)
1. This stay and appeal has come before us as the appellants in this case were found to be manufacturing from raw leather what has been called as "shoe uppers". A major portion of the entity being manufactured is exported to foreign buyers while the duty demand and penalties in this case have been confirmed on that portion of 'shoe uppers' made as per the designs submitted by a local customer who supplied the leather for converting it into 'shoe uppers'. They duty demand and penalties have been confirmed as the Commissioner has come to a finding that the provisions of Notification 214/86-CE were not complied inasmuch as no verification could be arrived at by him that the goods have reached the supplier of the leather or and then exported as claimed by the appellants before him.
2. Ld. Advocate for the appellants strongly argued the case on the basis that the Commissioner has not established the fact that 'shoe uppers' being manufactured by them were marketable and the mere fact that they were being sold in international market as per the designs of foreign buyers and/or as per the designs of local customers and that duty demand has been determined will not establish the marketability, as marketability has to have an essential ingredient of stock and sale. They also relied on the case of Mirza Tanners Ltd. v. CCE, - 2000 (37) RLT 46 (CEGAT) wherein in similar circumstances, the Hon'ble Tribunal had held that the procedural lapse of 'shoe uppers' made on job work out of leather supplied by customer and returned to the customer by not following the procedures under Rule 173N of Central Excise Rules, benefit of the notification 214/86-CE available could not be denied. They also submitted that they have applied for and got a declaration under Notification 13/92 regarding which the Commissioner has not found any objection in the subject Order-in-Original. Therefore, the very basis of the charge that they conducted their affairs in a clandestine manner without obtaining the registration has no basis. They have also submitted that 'No Modvat Availed' certificate have been signed and issued by the Range Superintendent to them. Therefore, there was no suppression or clandestine activity on their part, invoking the proviso to Section 11A or/and Section 11AC is not called for in the facts of this case. Since there was no duty payable, all the goods having been exported, there could be no intention to evade in any case.
3. Ld. DR on the other hand, brought to our attention para 10 of the order wherein the appellants had promised to submit the required evidences to establish the factum of export of the goods impugned in the show cause notice. However, it appears from the Commissioner's order that the factum of the goods having been processed from job work under the procedure of Notification 214/86-CE could not be established for failure on the part of the appellants and therefore the duty demands and penalties are required to be upheld.
4. We have considered the rival submissions and since the matter has come for stay, we grant waiver of pre-deposit with the consent of both sides and take up the appeal itself for final decision and after considering the submissions we find -
(a) that para 10 of the order itself records "the duty involved on the remaining goods for which no Excise invoices has been produced works out to Rs. 4,14,425". For which the Id. Advocate submitted a statement and therefore it would be apparent that a major part of the impugned goods out of the total demand of Rs. 32 lacs or so have been satisfactorily explained to have been used for export shipments;
(b) we find that the facts of this case are covered by the decision of Mirza Tanners Ltd. as reported in 2000 (37) R.L.T. 46 (CEGAT) and we respectfully follow the same. A major portion of the goods have been shown to have been eventually exported. We find that leather tanneries operators were working on an assumption of liberalised system of exports and there has been no clear finding arrived at of the goods having entered the Indian domestic market so that the levy of Excise duty would be attracted; we are aware that Excise levy is on production and manufacture, but its recovery has been deferred by law upto the stage they enter the area of domestic consumption. Therefore, it is imperative and necessary for Revenue to establish for even goods for which procedures have not been followed that the goods entered the domestic market. Since the same has not been done, the demand cannot be upheld, we would find that the appeal in this case should be allowed;
(c) we have considered the submissions regarding the marketability of 'shoe uppers'. We are of the view that since there is no finding on the subject by the Commissioner, no finding need be arrived at this stage by this Bench;
(d) since the appellants are covered by exemption from Registration Control by Notification 12/92, and it is an admitted position that they have complied with this notification, we do not find any reason to justify any penalty in the facts of this case.
5. In view of our findings above, we set aside the order and allow the appeal.