Revenue neutrality defeats a duplicate duty demand, though premature self-adjustment may still attract separate penalties.

A duty demand cannot be sustained where an assessee, already entitled to abatement for the same period, adjusts that abatement suo motu against its duty liability and the transaction is revenue neutral. Although such premature adjustment before formal sanction may expose the assessee to separate penal consequences, it does not justify demanding the same amount again when the revenue position is otherwise unchanged. On that basis, the demand was held unsustainable, and only possible penalty proceedings were left unaffected.

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Issues: Whether the duty demand was sustainable when the assessee had adjusted the abatement amount against its duty liability on its own, and whether the case was revenue neutral.

Analysis: The assessee was entitled to abatement to the extent of the amount in question, and the same amount was also payable as duty for the relevant period. The adjustment was made suo motu before formal sanction, which could invite penal consequences, but the substance of the transaction remained that the revenue position was neutral. In such circumstances, there was no justification to sustain a demand for the same amount of duty.

Conclusion: The duty demand was not sustainable and the issue was decided in favour of the assessee.

Final Conclusion: The appeal succeeded and the duty demand was set aside, with only the possibility of separate penal consequences left unaffected.

Ratio Decidendi: Where the assessee is otherwise entitled to an abatement equal to the duty liability for the same period, a demand cannot be sustained merely because the assessee adjusted the amount suo motu, if the transaction is revenue neutral.

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