Voluntary pre-notice payment of excise duty bars penalty under Section 11AC and allied excise provisions.

Where excise duty is voluntarily paid in full before issuance of the show cause notice, penalty under Section 11AC of the Central Excise Act and Rule 173Q of the Central Excise Rules is not leviable. The Tribunal noted that the notice itself treated the pre-notice payment as voluntary and only sought appropriation of the amount already paid. Relying on prior decisions, it held that such voluntary discharge of duty excludes penal action under the corresponding excise penalty provisions, and the penalty was set aside.

---

---

Issues: Whether penalty under Rule 173Q of the Central Excise Rules, 1944 and Section 11AC of the Central Excise Act, 1944 was sustainable where the entire duty was paid before issuance of the show cause notice.

Analysis: The duty demand had been discharged in full before the show cause notice was issued. The notice itself treated the payment as voluntary and sought appropriation of the amount already paid. The Tribunal noted that the cases relied upon by the assessee had consistently held that, where duty is paid voluntarily before issuance of the show cause notice, penalty under Section 11AC and allied penal provisions is not attracted. The authority distinguished the revenue's relied upon case because it did not clearly establish whether the payment there was voluntary.

Conclusion: Penalty was not sustainable and was set aside in favour of the assessee.

Ratio Decidendi: Where duty is voluntarily paid in full before issuance of the show cause notice, penalty under Section 11AC and corresponding excise penalty provisions is not leviable.

---