Pre-notice payment of duty and interest defeats penalty when no mala fide intent to evade is shown.

Penalty was not leviable where the assessee discharged duty and interest before issuance of the show cause notice. On those facts, the rule invoked was read in light of the prior payment, and there was no basis to infer any mala fide intention to evade duty or interest. The Commissioner and the Tribunal had reached the same conclusion on the evidence, and the Revenue's challenge to the penalty failed.

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

Analysis: The duty and interest were discharged before any demand was made by notice, and the rule relied upon was read in the context of that prior payment. On those facts, there was no basis to infer any mala fide intention to evade duty and interest. The concurrent findings of the Commissioner and the Tribunal proceeded on the same footing and declined to sustain penalty.

Conclusion: Penalty was not leviable and the Revenue's challenge failed.

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