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Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: (i) Whether interest on the duty demand was chargeable only from the date of the Supreme Court's order or from the relevant date till actual payment. (ii) Whether penalty under Section 11AC was mandatory in the facts of the case and whether reduction of penalty was justified.
Issue (i): Interest liability under the compound levy regime was not postponed merely because the Supreme Court had earlier decided a related question. In the absence of any holding that interest starts only from the date of that order, the applicable rule required computation from the date the amount became due till payment.
Conclusion: The issue was decided in favour of the Revenue.
Issue (ii): Section 11AC did not operate mechanically in every case of delayed payment. As there was no finding that the statutory conditions for its application existed or that mens rea was established, the penalty could be reduced on the principle of proportionality and was not required to be imposed at a mandatory minimum.
Conclusion: The issue was decided in favour of the assessee.
Final Conclusion: The appeal succeeded only on the interest question, while the reduced penalty was sustained, resulting in a partial allowance of the revenue's challenge.
Ratio Decidendi: Interest on duty under the relevant excise rules is recoverable from the date it becomes due, and penalty under Section 11AC depends on the statutory conditions for its application and may be moderated where those conditions are not established.
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