Compound Levy Scheme dues paid before capacity redetermination can defeat interest and penalty for delayed deposit.

For duty paid under the Compound Levy Scheme, prior payment before final determination of annual production capacity and before issuance of a show cause notice prevented liability to interest and penalty for alleged delayed deposit. The Court distinguished the Revenue's relied-on precedent because, on those facts, duty had not been paid before redetermination of capacity and a show cause notice had been issued. On the present facts, the earlier deposit removed the basis for fastening ancillary liabilities, so interest and penalty were held not leviable and the Tribunal's order remained undisturbed.

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Issues: Whether interest and penalty were payable for delayed deposit of central excise duty under the Compound Levy Scheme when the assessee had deposited the duty before final redetermination of annual production capacity and before issuance of show cause notice.

Analysis: The assessee had deposited the duty amount in March 1999 for the relevant period before the annual production capacity was finally determined and before any show cause notice was issued. The earlier decision relied on by the Revenue was distinguished because, in that case, the duty had not been paid before redetermination of capacity and the assessee had also been served with a show cause notice. On the present facts, the prior payment removed the basis for fastening the assessee with interest and penalty for the alleged delay.

Conclusion: Interest and penalty were not leviable on the assessee in the facts of the case.

Final Conclusion: The Revenue's challenge failed, and the Tribunal's order was left undisturbed.

Ratio Decidendi: Where duty under the Compound Levy Scheme is paid before final determination of annual production capacity and before issuance of show cause notice, interest and penalty for delayed deposit are not sustainable on the facts of the case.

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