Tribunal overturns duty & penalty demand, confiscation unjustified. Extended limitation period rejected. Appeal allowed.

The tribunal set aside the demand of duty and penalty under Section 11AC of the Central Excise Act, as the evidence did not support the allegations. The confiscation of footwear without retail sale price marking was deemed unjustified, given the ongoing marking process observed. The invocation of the extended period of limitation was rejected due to lack of evidence of suppression of facts. The appellant's argument of the demand being time-barred and the retraction of statements were considered, leading to the appeal being allowed on 1-8-2011.

---

---

Issues Involved:
1. Demand of duty and penalty under Section 11AC of the Central Excise Act.
2. Confiscation of footwear without retail sale price (MRP) marked or embossed.
3. Invocation of the extended period of limitation on the ground of suppression of facts.
4. Time-barred demand and retraction of statements by the appellant.

Issue-wise Detailed Analysis:

1. Demand of Duty and Penalty under Section 11AC of the Central Excise Act:
The appellant contested the demand of Rs. 2,49,73,067/- and the equal amount of penalty imposed under Section 11AC of the Central Excise Act. The demand was based on the alleged violation of Notification No. 6/02 as amended by Notification No. 23/04 and Notification No. 5/06, which required footwears to have the retail sale price indelibly marked or embossed to avail exemption/concessional rate of duty. The Revenue's case was that 18061 pairs of footwear found in the appellant's factory did not have the MRP marked or embossed, thus violating the notification conditions. The appellant argued that the condition of MRP marking was factually incorrect as only 18061 pairs out of 24517 pairs were found without MRP, and there was no evidence that these unmarked footwears were cleared without marking the MRP.

2. Confiscation of Footwear without Retail Sale Price (MRP) Marked or Embossed:
The adjudicating authority confiscated the footwear found without MRP marking and allowed their release on payment of a redemption fine of Rs. 5.00 lakhs. The appellant contended that the confiscation was unjustified as the footwears were still in the factory and there was no evidence that they were going to be cleared without MRP marking. The presence of 6456 pairs of footwear with MRP marking in the factory indicated that the process of marking was ongoing. The tribunal found that the confiscation was not sustainable as there was no evidence that the footwears were to be cleared without MRP marking.

3. Invocation of the Extended Period of Limitation on the Ground of Suppression of Facts:
The Revenue invoked the extended period of limitation, alleging suppression of facts by the appellant. The appellant argued that the demand was time-barred as the benefit of the notification was reflected in their monthly returns, and there was no intent to evade duty. The tribunal found that the demand was not sustainable on the evidence on record, particularly since no footwear was found outside the factory without retail sale price printed, and affidavits from 62 dealers confirmed that the footwears received by them had MRP printed.

4. Time-barred Demand and Retraction of Statements by the Appellant:
The appellant argued that the demand was time-barred and that the statements relied upon by the Revenue were retracted by the General Manager and the excise clerk. The tribunal noted that the retraction of statements was not made before the investigating authority, and there was no evidence that affidavits were submitted to the Revenue. However, the tribunal concluded that the demand was not sustainable as there was no evidence that footwears were cleared without MRP marking, and the presence of 6456 pairs with MRP marking indicated compliance with the notification conditions.

Conclusion:
The tribunal set aside the impugned order, finding that the demand of duty and penalty was not sustainable on the evidence presented. The confiscation of footwear was also found to be unjustified as there was no evidence that the footwears were to be cleared without MRP marking. The appeal was allowed, and the order was pronounced in the court on 1-8-2011.

---