Interest on differential duty not payable where provisional assessment shortfall is paid before finalisation.

Interest is not leviable on differential duty where the assessee pays the additional amount before finalisation of provisional assessment and no further duty survives on final assessment. On these facts, captive clearances were assessed provisionally, the differential duty was discharged voluntarily before completion of assessment, and the demand for interest was held unsustainable. The governing principle applied was that interest liability does not arise when the duty differential has already been paid and there is no remaining shortfall on final assessment.

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Issues: Whether interest was payable on differential duty where the assessee had paid the differential amount before finalisation of the provisional assessment.

Analysis: The appeals concerned captive clearances made on payment of duty under provisional assessment. The assessee discharged the differential duty on its own before the assessments were finalised. The Court noted that the governing principle, as settled by prior authority, is that interest liability does not arise when the differential amount is already paid before finalisation and no differential duty remains to be demanded on final assessment.

Conclusion: Interest was not payable on the differential duty in these facts, and the assessee succeeded on the issue.

Final Conclusion: The duty paid before finalisation of provisional assessment did not attract interest liability, so the demand of interest could not be sustained.

Ratio Decidendi: Interest is not leviable on differential duty where the assessee pays the amount before finalisation of provisional assessment and no differential duty survives on final assessment.

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