Interest on provisional assessment refunds accrues from the due date, and corresponding refund cannot be denied after mutual adjustment.

Interest on finalisation of provisional assessment was linked to the settled rule that interest on short-paid duty accrues from the due date, not from the date of final assessment. Applying that principle, the assessee quantified the mutual interest liabilities and had already discharged the interest payable on the short-paid duty. On that basis, the corresponding interest due on excess duty paid could not be withheld merely because the final assessment order was not separately challenged. The assessee was therefore entitled to the interest refund, subject to adjustment of the amount payable to the Government.

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Issues: Whether, on finalisation of provisional assessment for the relevant period, the assessee was entitled to refund of interest computed on excess duty paid after adjusting the interest payable on short-paid duty.

Analysis: The dispute turned on the relevant date from which interest was payable after provisional assessment was finalised. The authorities had kept the computation of interest pending because the question was sub judice, and the governing principle was later settled by the High Court in line with the Larger Bench view that interest on short payment accrues from the due date and not from the date of final assessment. Once that principle stood settled, the assessee quantified both sides of the interest liability and had already discharged the interest payable to the Government on short-paid duty. In that situation, there was no legal basis to deny release of the corresponding interest due to the assessee on excess duty paid merely because the final assessment order itself had not been separately challenged.

Conclusion: The assessee was entitled to the interest refund claimed, after adjustment of the amount payable to the Government.

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