Prior payment of duty defeats Rule 173Q penalty when made before the show cause notice.

Penalty under Rule 173Q of the Central Excise Rules was held not sustainable where the duty had already been debited before issuance of the show cause notice. The Tribunal applied settled precedent to the facts and treated prior payment of duty, made soon after the lapse was pointed out, as removing the basis for penal action. On that footing, the penalty was set aside.

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Issues: Whether penalty under Rule 173Q of the Central Excise Rules was sustainable when the duty had been paid before issuance of the show cause notice.

Analysis: The duty demand had been debited soon after the lapse was pointed out and long before the show cause notice was issued. The point was treated as already settled by Tribunal precedent, and the Court applied that settled position to the facts before it.

Conclusion: Penalty under Rule 173Q was not sustainable and was set aside.

Ratio Decidendi: Where the duty is paid before issuance of the show cause notice, penalty under Rule 173Q is not attracted on the settled law applied by the Tribunal.

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