By TIOL News Service

MUMBAI, JAN 17, 2014: THE appellants received footwear from karigaars in loose form in jute bags, plastic bags, basket, etc. Thereafter, they affixed a sticker showing information as Item No., brand name ‘REGAL' and the MRP. A pair of footwear is put in plastic bags having ‘REGAL' monogram and ‘REGAL' brand name printed on it. Thereafter, the shoes are packed in cardboard boxes having ‘REGAL' brand name printed on it and on the card board boxes also stickers are affixed which indicate item No., colour, bar code, size and MRP. The appellants also claimed that they were receiving footwear from karigaars in finished form in boxes bearing MRP. In such cases, only the size of footwear is either embossed or a sticker is affixed on the bottom sole of the footwear. After receiving the footwear, they put a sticker showing item No., date of packing and MRP on the bottom side of the sole and on the front side of the sole, they put a sticker with the brand name REGAL. Thereafter, they repack the pair of footwear in the same cardboard boxes received from the karigaars.

The department was of the view that the activity undertaken by the appellant amounted to manufacture under Section 2(f)(iii) of the CEA, 1944 since footwear is specified in the Third Schedule to the CEA, 1944 and, therefore, the appellants are liable to discharge excise duty liability thereon.

SCNs were issued to the appellants demanding CE duty of Rs.68,89,230/- and Rs.66,15,053/- for the period 19/06/2003 to 30/09/2003 and 01/10/2003.

The said notices were adjudicated and duty demands as mentioned were confirmed against Shri Imran Virji and Shri Amin Virji respectively.

The appellants are before the CESTAT.

They submitted that they accept the duty liability in respect of the activity undertaken of repacking of the shoes and affixing labels indicating item No., colour, MRP and brand name ‘REGAL', etc.

However, in respect of shoes received in cardboard boxes, which would be about 10 to 15% of the transactions, where they have affixed only a sticker on the shoes indicating the bar code number and the size of the shoes, and the brand name at the bottom of the sole, they are disputing the tax liability. Inasmuch as it is their contention that this activity of labeling undertaken on the already packed shoes does not amount to manufacture in view of the decisions in Rafique Malik - (2005-TIOL-1594-CESTAT-MUM), Shree leathers vs. Commissioner of Central Excise 2012 (275) ELT 225 and Amazon Seller Services - (2012-TIOL-04-ARA-CX).

The Revenue representative inter alia submitted that vide letter dated 02/06/2004, the appellants had informed the adjudicating authority that they are not be in a position to give the bifurcation of the shoes purportedly received by them in the manner as claimed by them and, therefore, in the absence of any evidence, the adjudicating authority has correctly confirmed the duty demand by treating the activity undertaken by the appellant as ‘manufacture' and therefore, the impugned orders are sustainable in law.

The Bench observed -

"5. We have carefully considered the submissions made by both the sides. The appellants have clearly admitted that in respect of shoes which are received in loose form and which are re-packed in cardboard boxes wherein details such as brand name, MRP, size of the shoes, colour of the shoes, etc. are affixed, they are liable to pay excise duty. This Tribunal in the case of Rafique Malik's case (cited supra) had also held that such activity would amount to ‘manufacture'. Therefore, bulk of the demands confirmed in the impugned orders have been admitted to by the appellants and are not disputed. They are disputing the liability only in respect of shoes received in pre-packed form i.e. in card board boxes where the MRP is affixed and the appellant undertakes affixing of stickers on the shoes indicating bar codes, MRP and logo of the appellant on the bottom of the sole. However, in the statements recorded under the provisions of the Central Excise Act, the appellants have clearly admitted that they have no evidence in respect of this claim. Further, it is also an admitted fact that opportunity was given to them by the adjudicating authority to lead evidence about the receipt of shoes in pre-packed form; however, the appellants were not able to lead any evidence in spite of sufficient time being granted and the appellants admitted that they have no evidence in this regard. Therefore, the claim of the appellant that they had received about 10% to 15% of the shoes in pre-packed form from the karigars is only a mere claim without any supporting evidence. In the absence of any supporting evidence, such a claim cannot be entertained and, therefore, the adjudicating authority was right in concluding that the activities undertaken by the appellants amounted to ‘manufacture' as defined in Section 2(f)(iii) of the Central Excise Act, 1944 read with Third Schedule thereof."

In fine, holding that there is no merit in the appeals, the CESTAT dismissed the same.

(See 2014-TIOL-84-CESTAT-MUM)