Extended-period central excise demand triggers penalty and interest, though prompt post-detection payment may reduce the penalty.

Where an extended-period central excise demand is accepted and remains undisputed, the statutory consequences of penalty and interest follow. The text states that invocation of the proviso to Section 11A(1) was accepted, so penalty under Section 11AC and interest under Section 11AB became leviable. It also notes that immediate reversal of duty after detection by Central Excise officers was relevant to moderating the penalty quantum. On those facts, penalty and interest were upheld, while the penalty amount was reduced.

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Issues: Whether, on an undisputed duty demand confirmed for the extended period, penalty under Section 11AC of the Central Excise Act, 1944 and interest under Section 11AB of the Central Excise Act, 1944 were leviable, and whether the penalty required reduction in view of immediate reversal after detection.

Analysis: The demand having been confirmed for the extended period and not disputed by the assessee, the invocation of the proviso to Section 11A(1) of the Central Excise Act, 1944 stood accepted. On that basis, the statutory consequences under Section 11AC and Section 11AB followed. At the same time, the assessee had discharged the duty liability immediately after detection by the Central Excise officers, which was taken into account for reducing the quantum of penalty.

Conclusion: Penalty and interest were held leviable. The penalty was reduced to Rs. 10 lakh, and the appeal was otherwise rejected.

Ratio Decidendi: Where extended limitation is attracted and the duty demand is not challenged, penalty under Section 11AC and interest under Section 11AB follow as statutory consequences, though the penalty quantum may be moderated on the facts.

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