Duty adjustment across tax heads permitted where law allows; penalty cannot survive once the underlying liability is resolved.

Where duty already paid under one head had been credited to the Union treasury, the Tribunal recognised adjustment against another duty head if such set-off was otherwise permissible in law. It held that the same taxing authorities should not block the adjustment merely because the payment was initially made under a different head, and treated the earlier payment as capable of lawful adjustment. Once the duty adjustment was allowed, the penalty could not survive and was waived, with consequential relief granted as admissible in law.

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Issues: Whether the amount of additional excise duty already paid could be adjusted against basic duty liability and, if such adjustment was permitted, whether the penalty imposed could survive.

Analysis: The Tribunal held that where duty paid under one head had gone to the treasury of the Union of India, the same authorities administering the levy should not prevent adjustment against another duty head, if such adjustment was otherwise permissible in law. Reliance was placed on the view that differential treatment in such a situation would serve no useful purpose, and the earlier payment was treated as capable of adjustment in accordance with law.

Conclusion: The appellant was entitled to adjustment of the amount already paid, and the penalty was waived.

Final Conclusion: The appeal succeeded to the extent of permitting adjustment of the duty amount and setting aside the penalty, with consequential relief as admissible in law.

Ratio Decidendi: Duty paid under one head may be adjusted against another duty head where such adjustment is not barred by law, and penalty cannot be sustained once the underlying grievance is so resolved.

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