Duty adjustment between levy heads defeats differential demand where excess payment fully offsets the alleged shortfall.

Excess duty paid under one levy can be adjusted against short payment under another when the total duty discharged is not in dispute, and if that adjustment removes the alleged shortfall, no differential demand can be sustained. The Tribunal applied this adjustment principle to hold that excess payment under NCCD neutralised the short payment of additional excise duty, so the demand for the differential amount was unsustainable and the appeal succeeded.

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Issues: Whether the differential demand could survive when the assessee had paid excess duty under one head and short-paid duty under another head, so that adjustment of the excess payment would leave no deficiency.

Analysis: The Tribunal noted that the total duty paid by the assessee was not in dispute and that the short payment under additional excise duty was offset by excess payment under NCCD. Relying on the principle that excess duty paid on one component can be adjusted against the duty liability on another component, the Tribunal held that where such adjustment removes the alleged shortfall, no demand can be sustained for the differential amount.

Conclusion: The demand was unsustainable after adjustment of the excess duty paid, and the appeal succeeded.

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