Value-based duty assessment fails where alleged excess quantity does not change sale price or actual tax liability.

Where valuation was based on price rather than pack quantity, an alleged excess of 32 gms. in containers marked as 30 gms. did not by itself justify a duty demand because the sale price and actual duty liability were unchanged. The theory that exact packing would have enabled more packs and greater revenue was treated as hypothetical and unsupported. As the underlying duty demand failed, the penalty also fell away because it depended on a valid duty liability. The Department's cross-objection therefore had no merit, and the duty demand and penalty were annulled.

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Issues: (i) Whether duty could be demanded on a projected revenue loss allegedly arising from packing 32 gms. in containers marked as 30 gms.; (ii) Whether penalty was sustainable when the demand itself was not justified.

Issue (i): Whether duty could be demanded on a projected revenue loss allegedly arising from packing 32 gms. in containers marked as 30 gms.

Analysis: The assessment was linked to value, not to the quantity contained in each retail pack. Since the selling price remained the same whether the pack contained 30 gms. or 32 gms., the alleged misstatement about quantity did not create a revenue consequence on the facts. The Department's theory that exact packing would have enabled manufacture of more packs and therefore more duty was treated as hypothetical and unsupported by the record.

Conclusion: The demand for duty was not justified and was set aside.

Issue (ii): Whether penalty was sustainable when the demand itself was not justified.

Analysis: The penalty rested on the premise that duty had been evaded or remained payable. Once the duty demand was found unsustainable, the foundation for penalty disappeared. The reference to absence of mens rea in another context did not assist the Revenue because the present case was not one where duty lawfully payable had remained unpaid.

Conclusion: The penalty was not sustainable and was set aside.

Final Conclusion: The appeals succeeded and the impugned duty demand and penalty were annulled, leaving the Department's cross-objection without merit.

Ratio Decidendi: Where assessment is value-based and the alleged excess quantity does not alter the sale price or actual duty liability, a projected revenue loss cannot justify a demand for duty, and penalty cannot survive without a valid underlying duty liability.

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