Penalty for short-payment requires suppression or intent to evade, while statutory interest on delayed duty remains payable.

Penalty for short-payment of duty was not sustainable because the clearance of free sale sugar as levy sugar was made pursuant to governmental directions, with no concealment, suppression, or deliberate misdeclaration shown; the penal requirement of culpable conduct was therefore not met and the penalty was set aside. Statutory interest on the differential duty was nevertheless payable for the period of delayed payment, as interest followed the confirmed duty liability under the applicable provision; that demand was upheld. The assessee thus obtained only partial relief, with penalty deleted but interest maintained.

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Issues: (i) Whether penalty was leviable for short-payment of duty in the absence of suppression of facts or misstatement with intent to evade duty; (ii) Whether interest was payable on the differential duty for the relevant period.

Issue (i): Whether penalty was leviable for short-payment of duty in the absence of suppression of facts or misstatement with intent to evade duty.

Analysis: The clearance of free sale sugar as levy sugar was done pursuant to governmental directions and the factual sequence did not show any concealment, suppression, or deliberate misdeclaration by the appellant. The penal provisions invoked required culpable conduct of the kind contemplated by the statute, and the factual foundation for such penalty was absent.

Conclusion: Penalty was not sustainable and was set aside in favour of the assessee.

Issue (ii): Whether interest was payable on the differential duty for the relevant period.

Analysis: Although the duty demand had been confirmed and the differential duty related to the period between receipt of the differential price and payment of duty, liability to interest followed from the statutory mandate under the applicable provision. The Tribunal's earlier decision on similar facts was applied to hold that interest accrued for the period of delayed payment.

Conclusion: Interest was payable on the differential duty and the demand of interest was upheld against the assessee.

Final Conclusion: The monetary penalty was deleted, but the liability to interest on the confirmed differential duty remained intact, resulting in only partial relief to the assessee.

Ratio Decidendi: Penalty under the central excise law is not justified unless the Revenue establishes suppression, misstatement, or intent to evade duty, whereas statutory interest remains payable on delayed discharge of confirmed duty liability.

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