Manufacturer's Appeal Rejected, Upholding Duty Liability on Free Samples

The Tribunal rejected the appeal, upholding duty liability on free samples supplied by the manufacturer to the dealer. The appellant's argument of no intention to evade tax was dismissed, as the Revenue contended that duty liability on samples was known based on past payments. The Tribunal inferred mis-declaration or suppression due to lack of document submission and consultation with the Department, leading to the confirmation of penalty and interest payment by the appellant.

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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.

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