Departmental appeal on penalty fails once the underlying credit dispute is already resolved in the assessee's favour.

A departmental appeal challenging only the absence of penalty did not survive after the assessee's appeal against the same order had already succeeded and the credit dispute had been decided in the assessee's favour. Once the underlying credit issue was finally resolved and the department did not carry that decision further, there was no independent basis to sustain a separate objection on penalty. The departmental challenge therefore lacked an operative foundation and was rejected.

---

---

Issues: Whether the departmental appeal could survive when the assessee's appeal against the very order had already been allowed and the credit issue had been decided in the assessee's favour.

Analysis: The departmental challenge was confined to the absence of penalty in an order that had disallowed credit. Since the assessee's separate appeal against that very order had already succeeded and the department had not carried that decision further, the underlying dispute concerning credit stood concluded. In that situation, the departmental objection on penalty did not survive independently.

Conclusion: The departmental appeal was not maintainable on the surviving facts and was rejected in favour of the assessee.

Final Conclusion: The impugned departmental challenge failed because the substantive credit dispute had already been resolved against the department, leaving no effective basis to interfere.

---