Mandatory central excise penalty applies despite partial duty payment before or after show-cause notice.

Section 11AC of the Central Excise Act was treated as mandatorily applicable once its statutory conditions were satisfied, leaving no discretion to waive or reduce penalty. Partial payment of duty before the show-cause notice, or payment of the balance after notice but before adjudication, did not displace the penal consequence. The Tribunal's deletion of penalty was therefore set aside, and the mandatory penalty was restored in favour of the Revenue.

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Issues: Whether penalty under Section 11AC of the Central Excise Act, 1944 could be sustained where part of the duty was paid before the show-cause notice and the balance after the notice but before adjudication.

Analysis: The Court applied the settled position that once the conditions for Section 11AC are attracted, the penalty is mandatory and the authority has no discretion to waive or reduce it. The Court relied on the Supreme Court's exposition that Section 11AC leaves no scope for discretion and that the statutory consequence follows when duty has been evaded and becomes determinable under the Act. The mere fact that some duty was paid before or after the show-cause notice did not displace the mandatory character of the penalty provision.

Conclusion: Penalty under Section 11AC was held to be invokable notwithstanding partial payment of duty before or after the show-cause notice, and the deletion of penalty by the Tribunal was set aside in favour of the Revenue.

Final Conclusion: The appeal succeeded, the questions of law were answered for the Revenue, and the mandatory penalty under Section 11AC was restored.

Ratio Decidendi: Where the statutory conditions for Section 11AC of the Central Excise Act, 1944 are satisfied, payment of duty before or after the show-cause notice does not confer discretion on the adjudicating authority to waive the mandatory penalty.

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