Pre-notice payment under Section 11A(2B) bars sustained excise demand and penalty where duty is voluntarily debited

Voluntary payment of differential central excise duty before service of the show cause notice attracted Section 11A(2B), so the later notice could not validly sustain the same demand and penalty. The tribunal treated the pre-notice debit as bringing the case within the statutory scheme for voluntary compliance, making confirmation of duty and penalty on that basis unsustainable. The assessee's challenge therefore succeeded, and the demand and penalty were set aside.

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Issues: Whether differential central excise duty paid before issuance of the show cause notice, in the context of Section 11A(2B), could still sustain the demand and penalty.

Analysis: The differential duty was voluntarily worked out and debited before the show cause notice was served. In such circumstances, the statutory scheme under Section 11A(2B) was attracted, and the later notice could not be sustained as a valid basis for confirming demand and penalty on the same footing. The challenge to the demand and penalty therefore succeeded.

Conclusion: The demand and penalty were not sustainable. The appeal was allowed in favour of the assessee.

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