Pre-show cause duty payment defeats penalty and interest under central excise law where the statutory explanation applies.

Penalty under Section 11AC and interest under Section 11AB of the Central Excise Act were not sustained where duty had been deposited before issuance of the show cause notice and the case fell within the Explanation to Section 11A(2B). The Court followed its earlier decisions in similar matters, which had already resolved the controversy in favour of the assessee, and therefore found no merit in the revenue's challenge. The question was answered against the revenue and in favour of the assessee, with penalty and interest not upheld.

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Issues: Whether penalty under Section 11AC of the Central Excise Act, 1944 and interest under Section 11AB of the Central Excise Act, 1944 could be levied where the duty had been deposited before issuance of the show cause notice and the case fell within the purview of the Explanation to Section 11A(2B) of the Central Excise Act, 1944.

Analysis: The issue stood covered by earlier decisions of the same Court in similar appeals, which had already held the controversy in favour of the assessee. In view of that settled position, the Court found no merit in the revenue's challenge under Section 35G of the Central Excise Act, 1944.

Conclusion: The question was answered against the revenue and in favour of the assessee; penalty and interest were not upheld in the present appeal.

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