High Court partially allows appeal, upholds penalty decision, sets aside interest cancellation. Recalibration of interest ordered.

The High Court partially allowed the appeal, confirming the Tribunal's decision on penalty but setting aside the cancellation of interest. The Court emphasized that non-payment of duty triggers interest liability and that if duty and interest are paid before notice service, subsequent notice issuance is without jurisdiction. The Court directed the recalibration of interest calculation for each year separately at 15% till the payment date and ordered the refund of excess amount to the assessee. Each party was to bear their own costs, and the substantial question of law was deemed unnecessary for consideration.

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Issues:
Challenge to order setting aside penalty and interest by Revenue.

Analysis:
The case involved a dispute where the assessee failed to meet export obligations, leading to a duty liability. The assessee deposited an amount towards duty and penalty, which was appropriated by the adjudicating authority. The Tribunal set aside the penalty and interest imposition, stating that as duty was paid before the show cause notice, penalty and interest were unjustified. The Revenue appealed against this decision.

The High Court analyzed the situation, emphasizing that non-payment of duty within the specified time automatically triggers interest liability. Referring to Section 28(2B), it noted that if duty and interest are paid before notice service, no notice should be issued. As the entire duty and interest were paid before the notice, the subsequent notice was without jurisdiction. The Court highlighted that if an amount exceeding the due sum is deposited, penalty imposition becomes unjustifiable.

Regarding interest calculation, the Court criticized the adjudicating authority for incorrectly calculating interest for three years uniformly at 15%. It clarified that interest is compensatory and should be calculated from the due date till payment. The Court directed the adjudicating authority to recalculate interest for each year separately at 15% till the payment date and refund the excess amount to the assessee.

In conclusion, the High Court partially allowed the appeal. It confirmed the Tribunal's decision on penalty but set aside the interest portion's cancellation. The matter was remitted to the adjudicating authority for accurate interest calculation. Each party was ordered to bear their own costs, and the substantial question of law was deemed unnecessary for consideration.

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