Little Star Foods Pvt Ltd Vs Commissioner of Central Tax Medchal – GST (CESTAT Hyderabad)
In Little Star Foods Pvt Ltd vs Commissioner of Central Tax, Medchal, the CESTAT Hyderabad examined the limited issue of imposition of penalty under Rule 25 of the Central Excise Rules, 2002, along with appropriation of duty and interest already paid by the appellant.
The appellant was engaged in manufacturing “Cadbury Perk with Glucose Energy” on a job work basis for another company and received conversion charges. A dispute arose regarding the classification of the product, with the department denying the benefit of concessional duty under relevant exemption notifications. The adjudicating authority classified the product under a specific tariff heading, denied the concessional rate, confirmed duty demand of ₹4.19 crore, and imposed equal penalty.
Before the Tribunal, the appellant did not contest the classification or denial of concessional duty. Instead, the dispute was restricted to two issues: (i) non-appropriation of duty and interest already paid, and (ii) imposition of penalty under Rule 25.
On the first issue, the appellant submitted that the entire duty and interest amounts had already been paid and acknowledged by the department. Evidence including communication from the department confirmed payment of duty and interest. However, the department had not appropriated these amounts, citing pendency of appeal and non-payment of penalty.
