[Order per: A.K. JYOTISHI]

M/s Little Star Foods Pvt Ltd (hereinafter referred to as the appellant) are in appeal against the OIO dt.03.06.2022 to the extent of imposition of penalty of Rs.41,91,517/- under Rule 25 of Central Excise Rules (CER), 2022.

The brief facts of the case are that the appellants were engaged in manufacture of ‘Cadbury Perk with Glucose Energy’ on job work basis for M/s Cadbury India Ltd and were receiving conversion charges. There was certain dispute regarding classification of said product and the department felt that their products were not eligible for availing benefit of concessional rate of duty under Notification No. 03/2006-CE. On adjudication, the adjudicating authority classified the product under the Chapter sub-heading 19053290 as ‘coated wafers - other than wafer biscuits’ and denied the benefit of concessional rate of duty under Notification No. 12/2012-CE dt.17.03.2012 and also confirmed demand of Rs.4,19,55,168/- and also imposed equal penalty.

Learned Advocate for the appellant has mainly submitted that they are not contesting the classification confirmed or the denial of concessional rate of duty by the adjudicating authority and what they are contesting is that the adjudicating authority has not appropriated the entire duty and interest already discharged by them in this regard. They are also contesting the imposition of penalty under Rule 25 of CER, 2002. Insofar as non- appropriation of duty and interest already paid, it is now settled that the adjudicating authority himself has duly acknowledged/ confirmed the payment made by the appellant. In support thereof, he has submitted an email from Medchal GST Commissionerate indicating confirmation of payment of Rs.4,19,55,167/- towards duty and Rs.5,37,07,126/- towards interest. The department has only made an observation that such payment cannot be accepted as closure of dues, since they had filed a second appeal and also due for payment of penalty.

On the issue of levy of penalty under Rule 25, his main submission is that no specific sub-clause of Rule 25 was invoked contrary to the law laid down by the Hon’ble Supreme Court in the case of Amrit Foods Vs CCE, UP [2005 (190) ELT 433 (SC)] and Jeevan Diesels and Electricals Ltd Vs CCE, Puducherry [2019 (365) ELT 397 (Mad)]. He has further submitted that sub- clause (a) to (c) to Rule 25 have never been invoked against the appellant. It is his contention that since Rule 25 begins with the term ‘subject to provisions of section 11AC’ and hence the requirement of section 11AC is a condition subject to which power under Rule 25 can be exercised and therefore, once the Tribunal, in its earlier order, had categorically held that section 11AC is not attracted, the question of invoking Rule 25 does not even arise. He has also submitted that levy of penalty was not an issue in appeal before the Hon’ble Supreme Court.

On the other hand, learned AR has essentially submitted that impugned order is an order passed in denovo proceedings and in the earlier rounds, the matter had already reached up to Hon’ble Supreme Court and therefore, has attained finality. Even the earlier Tribunal order remanded the matter, which was contested by the appellant, by upholding the demand and has only remanded back for re-computation of the amount. The Tribunal also in their order dt.06.08.2019, inter alia, held that since the issue is interpretative in nature regarding exemption notification, therefore, the penalties imposed under section 11AC need to be set aside. It was also broadly observed that no element of fraud, collusion, willful misstatement, suppression of facts, etc., with an intent to evade payment of duty has been established. However the Tribunal did not set aside the penalty imposed under Rule 25.

Heard both sides and perused the records.

Insofar as merit of the case is concerned, we find that it is now settled and the demand confirmed by the adjudicating authority in the reman