TMI Blog2007 (3) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount of duty on being detected by the departmental Officer before issuance of the show cause notice?" 2. The facts necessary for the present case are that along with show cause notice for levy of duty which has not been paid notice for levy of penalty was also issued for committing breach of Rule 9(1), 52A, 53,173F, 173Q and 226 of Central Excise Rules read with Section 3 of the Additional Duties of Excise Act, 1957, Penalty was sought to be levied under Rule 9(2), 52A, 193Q and 226 of the Central Excise Rules read with Section 11AC of Central Excise Act for contravention of aforesaid provisions and ultimately finding that the duty was short levied, a penalty under Rule 9(2) read with Rule 173Q was imposed and also a penalty equi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adjudicating officer sought to include in the monetary consideration, short duty was deposited by the manufacturer during the course of scrutiny but before issuance of the show cause notice. Penalties were imposed under Section 11AC Rule 173Q. 7. On appeal, the Commissioner (Appeals) affirmed the short levy of duty and also the levy of penalty under Section 11AC equal to amount of Duty short levied but set aside the penalty levied under Rule 173Q in respect of very same defaults. 8. The Tribunal, however, held that in view of decision in CCE v. Gaurav Mercantiles Ltd. reported in 2005 (190) E.L.T. 11, since assessee has already deposited the amount of short levy of duty before issuance of show cause notice, no penalty was leviab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court have all taken the view that where duty imposed has been deposited before issuance of the show case notice under Section 11AC of the Central Excise Act, 1944, no action under Section 11AC of the Act, 1944 should be initiated or taken. 12. Further the Karnataka High Court while considering the question opined that where the party even before issuance of show cause notice has deposited the duty, the inference can reasonably be drawn that there was no question of any fraud, misrepresentation or suppression of fact, which is essential foundation for levy of penalty under Section 11AC of the Act of 1944, at all. In coming to this conclusion, the Karnataka High Court has referred to the decision of Tribunal in Rashtriya Ispat Nigam L ..... X X X X Extracts X X X X X X X X Extracts X X X X
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