Commissioner rules in favor of appellants on footwear pricing exemption appeal

The Commissioner allowed the appeals, setting aside the original order that demanded duty, penalty, and interest from the appellants. The issue revolved around whether marking the retail price with stickers on footwear fulfilled the indelible marking requirement of Condition No. 35A under Notification No. 6/2002-C.E. The Commissioner interpreted the exemption notification strictly but considered the purpose of exempting affordable footwear. Finding that stickers with indelible marking on the footwear, along with printed prices, met the condition, the Commissioner ruled in favor of the appellants.

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Issues:
Exemption under Notification No. 6/2002-C.E., dated 1-3-2002 for footwear retail sale price marking.

Analysis:
The case involved two appeal numbers filed against an Order-in-Original passed by the Joint Commissioner, Central Excise, Kanpur. The appellants, engaged in manufacturing footwear, were availing exemption under Notification No. 6/2002-C.E., dated 1-3-2002, for footwear with a retail sale price not exceeding Rs. 250 per pair. An amendment to the notification inserted Condition No. 35A, requiring indelible marking or embossing of the retail sale price on the footwear itself. The issue arose when it was found that the appellants were marking the price with stickers, which the authorities deemed did not fulfill the condition. Consequently, a show cause notice was issued, leading to a demand for duty, penalty, and interest on the appellants. The appellants contested this decision on various grounds, including compliance with the marking requirement and the absence of evidence from the department regarding non-compliance during the disputed period.

During the personal hearing, the appellants reiterated their arguments, citing relevant case law to support their position. The Commissioner carefully reviewed the facts, the original order, and the grounds of appeal. It was noted that the appellants claimed they were already marking the retail price on the footwear before the amendment due to obligations under the Standards of Weights & Measures Rules. The dispute centered on whether marking with stickers satisfied the indelible marking requirement of Condition No. 35A. The department did not provide evidence contradicting the appellants' claims of double marking with stickers and printing on the footwear itself.

The Commissioner interpreted the exemption notification strictly but also considered the purpose of the notification, which was to exempt footwear below a certain retail price. It was observed that the primary objective was to provide duty exemption for affordable footwear. The Commissioner disagreed with the narrow interpretation of indelible marking, stating that as long as the marking was on the footwear, it met the notification's condition. As stickers with indelible marking were affixed to the footwear along with the printed price, the appeals were allowed, and the original order demanding duty, penalty, and interest was set aside.

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