Concessional penalty under Section 11AC applies only when statutory payment conditions are met before or soon after notice.

Concessional penalty under Section 11AC of the Central Excise Act, applied through Section 83 of the Finance Act to service tax penalties under Sections 76 to 78, is available only where the tax is paid before issuance of the show cause notice or within 30 days of service of that notice. If neither statutory condition is met, the authority has no further discretion to reduce the penalty below the prescribed level. On that construction, the appellant could not claim reduction to 25%, and the penalty reduction to 50% was upheld.

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Issues: Whether the appellant was entitled to reduction of penalty to 25% despite not paying the tax within 30 days of the show cause notice.

Analysis: The dispute was confined to penalty, as the tax demand and interest stood accepted. Section 11AC of the Central Excise Act, read with Section 83 of the Finance Act, was applied to service tax penalty under Sections 76 to 78 of the Finance Act, 1994. On that construction, the reduced penalty benefit was available only where the tax was paid before issuance of the show cause notice or within 30 days of its service. Since neither condition was satisfied, no further discretion existed to grant a lower penalty. The cited precedent did not assist because the assessee there was otherwise entitled to the statutory concession, whereas that entitlement was absent here.

Conclusion: The appellant was not entitled to penalty reduction to 25%, and the order reducing penalty only to 50% was upheld.

Ratio Decidendi: The concessional penalty under Section 11AC is available only in the specific statutory situations prescribed, and where those conditions are not met the adjudicating authority has no discretion to grant further reduction.

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