Pre-show cause duty payment bars penalty and interest under central excise provisions, following prevailing judicial authorities.

Where duty is paid before issuance of the show cause notice, penalty under Section 11AC and interest under Section 11AB are not leviable under the cited central excise provisions. The text follows the Larger Bench ruling in Machino Montell and the Bombay High Court in Gaurav Mercantile Ltd., which were treated as prevailing over contrary Tribunal decisions. On that basis, the departmental appeal failed and the order imposing penalty and interest was affirmed in favour of the assessee.

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Issues: Whether penalty and interest could be imposed when the duty had been paid before issuance of the show cause notice.

Analysis: The issue was covered by the Larger Bench decision in Machino Montell and by the Bombay High Court in Gaurav Mercantile Ltd., both of which held that where duty is deposited before issuance of the show cause notice, penalty under Section 11AC and interest under Section 11AB are not leviable. The contrary Tribunal decisions relied upon by the Revenue were treated as subordinate to the later and higher judicial authorities.

Conclusion: Penalty under Section 11AC and interest under Section 11AB were not leviable since the duty had been paid before the show cause notice.

Final Conclusion: The departmental appeal failed and the order against penalty and interest stood affirmed in favour of the assessee.

Ratio Decidendi: Where duty is paid before issuance of the show cause notice, penalty and interest cannot be imposed under the cited central excise provisions.

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