Clandestine removal and suppression justified interest and penalty despite duty payment before notice in excise proceedings.

Clandestine removal of excisable goods without statutory invoices and without compliance with excise procedure was treated as suppression of facts and conduct indicating intent to evade duty. On that factual basis, invocation of the extended period under the proviso to Section 11A(1) was upheld, and the same foundation supported levy of interest under Section 11AB and penalty under Section 11AC. Prior payment of duty before issue of the show cause notice did not extinguish the penal consequence where evasion and suppression were established.

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Issues: Whether, in a case of clandestine removal of excisable goods accompanied by suppression of facts and contravention of the Central Excise Rules, interest under Section 11AB and penalty under Section 11AC of the Central Excise Act, 1944 could be sustained despite payment of duty before issuance of the show cause notice.

Analysis: The removal of goods without statutory invoice and without following the mandatory excise procedure was treated as clandestine conduct, from which intention to evade duty was inferred. On that basis, the invocation of the extended period under the proviso to Section 11A(1) was upheld, and the same factual foundation was held sufficient for levy of interest and imposition of penalty. Prior payment of duty before the show cause notice did not neutralise the penal consequence under Section 11AC.

Conclusion: The interest demand and penalty were held to be valid and enforceable against the assessee.

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