Section 11C notification treating goods as non-dutiable defeats duty demand, with penalty and interest falling away as well.

A subsequent Section 11C notification covering the very period in dispute treated the goods as non-dutiable, so the duty demand could not be sustained for that period. Because the levy itself failed, the consequential penalty and interest also could not survive. The earlier exemption notification was not in force during the relevant period, but the later government intervention was ative on taxability. The impugned order confirming duty, penalty and interest was set aside and the assessee obtained full relief.

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Issues: Whether the demand of duty, penalty and interest could survive for the period 1-7-2004 to 3-8-2004 in view of the later notification issued under Section 11C treating the product as non-dutiable.

Analysis: The product was covered by an earlier exemption notification, but that notification was not in force during the relevant period. A subsequent notification issued under Section 11C specifically granted exemption for the same product for the very period in dispute. The Central Government's intervention showed that the goods were to be treated as non-dutiable during that period, and once the levy itself could not be sustained, the consequential penalty and interest also could not survive.

Conclusion: The demand of duty, penalty and interest was unsustainable and the appeal was allowed.

Final Conclusion: The impugned order confirming duty, penalty and interest was set aside, and the assessee obtained full relief.

Ratio Decidendi: Where a subsequent exemption notification under Section 11C covers the very period in dispute and treats the goods as non-dutiable, the duty demand and all consequential penalty and interest cannot be sustained.

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