2008 (6) TMI 502 - AT - Central Excise

Penalty and interest - Suppression of fact - Held that - In view of the present system of self-assessment where documents like invoice, challans and other transaction details are not supplied to the Department and inasmuch as the appellants did not inform the Department in advance or consult the Department, the intention will have to be based on documents & accounting system. Once the documents are not submitted to the Department, mis-declaration or suppression are rightly invokable - appeal dismissed.

Summary

Issues: Duty liability on free samples supplied by the manufacturer to the dealer.

In this case, the appellant, engaged in the manufacture of ceramic tiles, supplied free samples to their dealer along with the quantity purchased by the dealer. The issue revolved around the duty liability on these free samples. Initially, upon verification by the Preventive Officer, the appellant promptly paid the duty involved without awaiting a show cause notice. Subsequently, a show cause notice was issued proposing penalty under Section 11AC and interest on the duty involved. The appellant paid the penalty and interest upon confirmation of the duty demand. The appellant argued that there was no intention to evade tax or duty, as they believed that duty on the samples was covered by the duty paid on the goods sold. The Revenue contended that the appellant was aware of the duty liability on free samples, as they had paid duty on other samples. The Tribunal noted the self-assessment system in place, where documents like invoices and transaction details are not submitted to the Department. Given the lack of submission of documents and consultation with the Department, the Tribunal concluded that mis-declaration or suppression could be inferred. Consequently, the appeal was rejected, upholding the duty liability on the free samples supplied by the manufacturer to the dealer.