Delayed central excise duty payment still attracts penalty and interest, though later deposit may justify a reduced penalty.

Failure to pay central excise duty at the time of clearance after crossing the SSI exemption limit attracted penalty under Section 11AC and interest under Section 11AB. Payment of duty only after clearance and before the show-cause notice did not erase the default, although it could justify a reduced penalty in view of the mitigating circumstance of later payment. The statutory scheme treated non-payment or short-payment when due as sufficient for levy of penalty and interest, and the reduced penalty was upheld on that basis.

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Issues: Whether penalty under Section 11AC of the Central Excise Act, 1944 and interest under Section 11AB were leviable where excise duty was paid only after clearance of goods but before issuance of the show-cause notice.

Analysis: The assessee had crossed the SSI exemption limit and failed to pay duty at the time of clearance. Prior payment of duty before the show-cause notice did not wipe out the default, though it could justify reduction in quantum of penalty. The statutory scheme treated non-payment or short-payment at the relevant time as attracting penalty, and delayed payment also carried interest liability. The Court found the Tribunal correct in holding that pre-notice deposit did not bar action under Section 11AC, while the reduced penalty reflected the mitigating circumstance of later payment.

Conclusion: Penalty under Section 11AC and interest under Section 11AB were held payable, and the reduced penalty was upheld.

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