Pre-notice duty payment bars central excise penalty under Section 11AC and related rules where liability was discharged before notice.

Penalty under Section 11AC of the Central Excise Act, 1944 and Rules 9(2), 52A, 173Q and 226 of the Central Excise Rules, 1944 was considered unsustainable where the duty had already been paid before issuance of the show-cause notice. The settled view applied was that, once the duty demand is discharged before the notice, penal consequence under these provisions is not leviable on those facts. The notice in this matter was issued after payment of duty, so the penalty could not be maintained.

---

---

Issues: Whether penalty under Section 11AC of the Central Excise Act, 1944 and Rules 9(2), 52A, 173Q and 226 of the Central Excise Rules, 1944 was sustainable when the duty had been paid before issuance of the show-cause notice.

Analysis: The issue was treated as settled by prior judicial authority. The duty demand had been discharged before the show-cause notice, and the settled view applied by the Tribunal was that, in such circumstances, penalty under Section 11AC and the relevant Central Excise Rules provisions is not leviable. On the facts, the notice was issued after payment of the duty, so the penalty could not be sustained.

Conclusion: Penalty under Section 11AC of the Central Excise Act, 1944 and Rules 9(2), 52A, 173Q and 226 of the Central Excise Rules, 1944 was not leviable, and the appeal succeeded.

---