Imposition of mandatory penalty equal to duty under Section 11AC even though duty is paid before the issue of Show Cause Notice. Supreme Court's judgement dated 12th May, 2009 in the case of U.O.I Vs. Rajasthan Spinning & Weaving Mills and Commissioner of Customs & Central Excise Vs. Lanco Industri

Supreme Court mandates equal penalty to duty u/s 11AC of Central Excise Act, no discretion for reduction.

The Supreme Court has ruled that the penalty under Section 11AC of the Central Excise Act, 1944, is mandatory and equal to the duty amount, even if the duty is paid before the issuance of a Show Cause Notice. This decision, in the cases involving Union of India, Rajasthan Spinning & Weaving Mills, and Lanco Industries, clarifies that there is no discretion to reduce the penalty when the conditions under Section 11AC are met. The judgement supports the Revenue's position and should be communicated to relevant authorities and judicial bodies handling similar cases.