Interest cannot survive when the underlying duty demand has been set aside on merits and remains unchallenged.

Where a duty demand has already been set aside on merits and that merits finding is not challenged, interest cannot survive independently on the same demand. The remand was limited to the question of interest for the delayed period, but the earlier tribunal decision had nullified the underlying demand in full. In the absence of any surviving enforceable demand, the basis for charging interest disappeared, and interest was held not payable on the remanded issue.

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Issues: Whether, on remand, interest was payable for the delayed period when the underlying demand had already been set aside on merits.

Analysis: The remit from the higher court was confined to consideration of interest for the delayed period. The earlier tribunal order had set aside the impugned demand in entirety on merits, and the revenue had not challenged that merits-based finding. In that situation, the demand itself was held to be unsustainable, and without a surviving enforceable demand, the question of charging interest did not arise.

Conclusion: Interest was not payable and the assessee succeeded on the remanded issue.

Ratio Decidendi: Where the underlying duty demand has been set aside on merits and that merits finding is not under challenge, interest cannot be sustained independently on the same demand.

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