Voluntary duty payment after detection of shortage does not bar penalty for clandestine removal under Rule 173Q.

Duty paid after departmental detection of shortage does not amount to voluntary disclosure or self-initiated payment, so the protective rule applicable to genuine pre-notice payments does not apply. Where physical verification by Central Excise officers reveals shortage of finished goods indicating clandestine removal, penalty under Rule 173Q remains exigible. The order setting aside penalty was therefore unsustainable, and the adjudication imposing duty and penalty was restored.

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Issues: Whether penalty under Rule 173Q was liable to be set aside merely because the duty was deposited before issuance of the show cause notice.

Analysis: Shortage of finished goods was detected only after physical verification by Central Excise officers, and the duty payment followed that detection. The deposit was therefore not a voluntary disclosure or self-initiated payment in law. Where shortage indicates clandestine removal and the assessee pays duty only after detection, the protective principle applicable to genuine voluntary payment before notice does not apply.

Conclusion: Penalty under Rule 173Q was exigible and the order setting it aside was unsustainable.

Final Conclusion: The Revenue's challenge succeeded and the adjudication imposing duty and penalty was restored.

Ratio Decidendi: Payment of duty after detection of shortage by departmental officers does not amount to voluntary payment so as to exclude penalty for clandestine removal.

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