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2013 (1) TMI 664 - HC - Central ExciseSection 11A(2B) Whether penalty can be levied, in case the duty is paid before the issuance of show cause notice Held that Section 11A(2B) provides that if person in default makes payment of the escaped amount of duty before the service of notice then the Revenue will not give him the notice u/s 11A(1) Explanation 2 to 11A(2B) makes it clear that if non-payment of duty is intentional and by reason of deception, penalty is leviable. In the instant case escape of duty was not intentional or there was a reason of deception No penalty shall be levied Against the revenue.
Issues:
1. Whether penalty could be levied if duty had been paid before the issuance of show cause notice. 2. Interpretation of relevant legal provisions regarding penalty and interest in excise duty cases. Analysis: The core issue in this appeal revolves around the question of whether a penalty can be imposed if the duty in question has already been paid before the issuance of a show cause notice. Both the Commissioner (Appeals) and the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) have concurred that if duty has been paid before the notice, penalty cannot be levied, citing a precedent involving Machino Montell (I) Ltd. The Tribunal's decision in Machino Montell (I) Ltd. was upheld by the Supreme Court in a subsequent case, establishing a precedent. The Supreme Court has also clarified that payment before notice does not absolve the party from paying interest under Section 11AB and that intentional evasion of duty would not be covered under the exemption. The judgment highlights that the payment of duty before the show cause notice typically exempts the party from penalty and interest. However, intentional evasion or deception would nullify this exemption. In this specific case, the revenue did not allege intentional evasion or deception. Therefore, the court found no substantial legal question to consider, leading to the dismissal of the appeal. The decision reinforces the principle that payment before notice generally precludes the imposition of penalty and interest, subject to exceptions for intentional evasion or deception.
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