Section 11AC penalty reduced where duty was paid before notice and no intent to evade was shown.

Penalty under Section 11AC was considered in a context where the duty had already been paid before the show cause notice and the facts did not show an intention to evade payment. The underlying dispute also concerned whether upgrading computers amounted to manufacture. On these facts, penalty was found to be imposable, but the quantum was treated as excessive and was reduced to Rs. 20,000.

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Issues: Whether the penalty imposed under Section 11AC was liable to be sustained in full or reduced.

Analysis: The duty confirmed had already been paid before issuance of the show cause notice. The circumstances showed no intention to evade payment, and the case also involved a dispute as to whether upgradation of computers amounted to manufacture. In these facts, while penalty was held to be imposable, the quantum was found to be excessive.

Conclusion: The penalty was reduced to Rs. 20,000.

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