Interest and penalty cannot follow when no subsisting duty liability exists and the differential duty was already paid before fresh determination.

Interest and penalty were held unsustainable where the earlier duty-determination order had been set aside, leaving no subsisting order fixing the assessee's liability until a fresh provisional determination was made. The differential duty had already been deposited before that fresh determination, so any intervening arrears did not arise from a default attributable to the assessee. In the absence of a valid duty liability during that period, interest could not be charged and penalty could not be imposed. The order dropping the interest and penalty demand was therefore affirmed.

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Issues: Whether interest and penalty were leviable when the earlier duty-determination order had been set aside, no subsisting order fixing the duty liability existed till a fresh provisional determination was made, and the differential duty had already been deposited.

Analysis: The earlier order fixing duty liability had merged in the final determination and, once that determination was set aside in appeal, there was no valid subsisting order fixing the assessee's liability until the competent authority passed the fresh provisional order. The differential duty payable on the later determination had already been deposited before that provisional order. In such circumstances, any arrears, if at all, arose not from default by the assessee but from the absence of a valid determination during the intervening period. In the absence of a subsisting duty liability, the demand for interest and the imposition of penalty could not be sustained.

Conclusion: The demand of interest and the penalty were not sustainable and the assessee succeeded.

Final Conclusion: The appeal was rejected and the order dropping the interest and penalty demand stood affirmed.

Ratio Decidendi: Interest and penalty cannot be imposed for a period when no subsisting order fixes the duty liability and the amount payable has already been discharged before the fresh determination.

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