2018 (2) TMI 1102 - AT - Central Excise

Penalty u/s 11AC - Refund of duty paid on the free supply of biscuits - rejection on the ground that the same is assessable to duty in terms of section 4A of the Act - Held that - the issue per se was mired in confusion during the period and was only laid to rest by the decision of the Larger Bench of the Tribunal in the case of INDICA LABORATORIES PVT. LTD. Versus COMMISSIONER OF C. EX., AHMEDABAD 2007 (5) TMI 19 - CESTAT,AHMEDABAD - there is a case for setting aside the penalty imposed under section 11AC - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Refund claim of duty on free supply of biscuits.
2. Imposition of penalty under Rule 5 of the Central Excise Rules, 2002.
3. Imposition of penalty under section 11AC of the Central Excise Act, 1944.
4. Allowance of discount on goods sold under MRP.

Analysis:
1. The appellants, manufacturers of biscuits, claimed a refund of duty paid on the free supply of biscuits offered under a 'Trade Load Offer.' The adjudicating authority rejected the refund claim citing assessability to duty under Section 4A of the Central Excise Act, 1944. The Commissioner (Appeals) upheld this decision, leading to Appeal No.E/185/2009.

2. A show cause notice was issued proposing a duty demand with interest and appropriation of the amount already paid. The original authority confirmed the demand and appropriation but imposed a penalty under Rule 5 of the Central Excise Rules, 2002. Both parties appealed, and the Commissioner (Appeals) upheld the duty liability, ordered penalty under section 11AC, and set aside the penalty under Rule 25. This resulted in Appeal No.E/109/2010.

3. During the hearing, the appellant did not contest the rejection of the refund claim or the duty demand. They sought relief from the penalty imposed under section 11AC, highlighting the confusion regarding the allowance of discount on goods sold under MRP. The Tribunal considered the matter settled by a previous decision and set aside the penalty under section 11AC.

4. The Tribunal dismissed Appeal No.E/185/2009 and partly allowed Appeal No.E/109/2010 by setting aside the penalty imposed under Section 11AC of the Central Excise Act, 1944. The decision was based on the clarification provided regarding the issue of discount on goods sold under MRP, as established by previous tribunal judgments.