Voluntary payment before show-cause notice bars penalty and interest under central excise provisions.

Voluntary payment of central excise duty before issuance of the show-cause notice was treated as barring levy of penalty and interest. The stated position is that, in such circumstances, penalty under Section 11AC and Rule 173Q is not attracted, and interest under Section 11AB is also not leviable. On that basis, the order sustaining penalty and interest was set aside, while the remaining challenge was rejected.

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Issues: Whether penalty and interest were leviable where the duty demand had been paid voluntarily before issuance of the show-cause notice.

Analysis: The duty had been paid before the show-cause notice. The issue was treated as no longer res integra and as settled by prior decisions that voluntary payment of duty before the notice excludes levy of penalty under Section 11AC and Rule 173Q, and also excludes interest under Section 11AB in such circumstances.

Conclusion: Penalty and interest were not leviable; the order sustaining them was set aside.

Final Conclusion: The appeal succeeded to the extent of deletion of penalty and interest, while the remaining challenge was rejected.

Ratio Decidendi: Where duty is paid voluntarily before issuance of the show-cause notice, penalty and interest under the relevant central excise provisions are not leviable.

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