New Delhi: In a relief for footwear major
Bata, the Supreme Court has set aside a duty demand by the
government over manufacturing of a `rubberized cotton
fabrics` solely used by the company while making canvas shoes.
Allowing Bata`s appeal, a bench comprising Justice
Dalveer Bhandari and Justice K S Radhakrishnan quashed the
show cause notice issued by the Excise Department regarding
it.
The apex court also set aside the order passed by the tax
tribunal CESTAT which had upheld the department`s demand
saying the fabric was dutiable.
"In view of the above facts... set aside the order of the
Tribunal and quash the show cause notices issued to the
assessee (Bata) since the Revenue had not produced any
relevant material to show the marketability of the product,"
the court said.
The excise department had issued the show cause notice to
Bata in March 1995 and directed the company to pay Rs 88 lakhs
as duty for 2.5 crore canvas shoes manufactured between 1990
and 1994 using rubberized cotton fabrics.
The Excise department had also imposed a penalty of Rs
one crore on the company under the Central Excise Rules, 1944.
The fabric is made by sandwiching various chemicals,
rubber and solvents between two sheets of textile fabric and
is used in the upper layer of the shoe.
This was challenged by Bata before Customs Excise and
Service Tax Appellate Tribunal had on December 2001 upheld the
order passed by the Commissioner of Excise saying the fabric
used by Bata for canvas shoes was dutiable.
However, the tribunal did not express any opinion on the
exemption and penalty imposed on the company and left it for
final hearing.
Following it, Bata had approached the apex court and
contended the fabric was manufactured for captive consumption
only and is not marketable and has no commercial identity.
Allowing it, the apex court has directed CESTAT to
dispose of Bata`s appeal without any delay.
-PTI
