Appeal granted with conditions: pay interest, penalty within 30 days. Non-compliance incurs penalty.

The appeal was allowed on the condition that the respondent pays the interest and penalty as specified within the given timeframe for the matter to be finally resolved. The Tribunal granted the respondent 30 days to pay interest and 25% of the total duty demanded to close the case. Failure to comply within the stipulated period would result in a penalty equal to the duty evaded.

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Issues:
1. Duty liability and penalty payment under Section 11A and 11AC of the Act.

Analysis:
The case involves an appeal filed by the department regarding shortages of raw material and finished goods found during a surprise check. The respondent paid an amount during the investigation stage, and a Show Cause Notice demanding duty was issued. The Adjudication order confirmed the duty demanded and imposed a penalty under Section 11AC equal to the total duty demanded. The Commissioner (Appeals) gave relief to the respondent on the penalty, stating that since the duty demanded had been paid before the show cause notice, no penalty was applicable. The department filed an appeal, arguing that the respondent did not discharge the full duty liability and 25% of the penalty as required. The interest was also not paid.

The provision of sub-section (1A) of Section 11A states that duty liability should be paid along with interest and 25% of such duty as penalty. In this case, although part of the duty was paid, interest and penalty were not paid. However, the remaining duty demanded was paid within 11 days from the issue of the Show Cause Notice and before adjudication. The order-in-original did not provide the option to pay 25% of the duty amount as penalty as per Section 11AC. Therefore, the Tribunal decided to give the respondent an opportunity to pay interest and 25% of the total duty demanded within 30 days for a final closure of the matter. Failure to make this payment within the stipulated period would result in a penalty equal to the duty evaded.

In conclusion, the appeal was allowed on the condition that the respondent pays the interest and penalty as specified within the given timeframe for the matter to be finally resolved.

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