Shortage of finished goods and accepted duty demand can sustain penalty and interest as consequential liabilities.

Shortage of finished goods in the factory was treated as supporting an inference of intent to evade duty. Because the related duty demand had been accepted and paid without challenge, the waiver of penalty and interest could not be sustained. The appellate tribunal therefore set aside the exemption from consequential liabilities, directed payment of interest as per law, and imposed penalty.

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Issues: Whether, on shortage of finished goods found in the factory and the duty demand having been accepted and paid, the waiver of penalty and interest was justified.

Analysis: The shortage of finished goods supported the inference of an intention to evade payment of duty. Since the duty demand arising from the shortage had been accepted without challenge, the exoneration from penalty and interest could not be sustained.

Conclusion: The waiver of penalty and interest was set aside, interest was directed to be paid as per law, and penalty was imposed.

Ratio Decidendi: Where shortage of finished goods establishes an inference of evasion and the related duty demand is ed, penalty and interest follow as consequential liabilities.

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