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1. In this appeal filed by the Revenue, the short question which arises for consideration is whether a penalty under Section 11AC of the Central Excise Act is liable to be imposed on the respondents on the facts of this case. There is no representation for the respondent despite notice, nor any request of theirs for adjournment.

2. The learned SDR reiterates the grounds of this appeal and relies on the following decisions:

(i) Union of India vs Dharmendra Textile Processors and Others 2008 (231) ELT 3 (SC);

4. Both the lower authorities took the view that, as the amount of credit was paid by the party prior to issuance of the show-cause notice, neither Section 11AB, nor Section AC was invocable against them. The learned SDR submits that this view taken by the lower authorities is contrary to the mandate of the law laid down by the Honble Supreme Court and the Honble High Courts in the cases cited above.

5. In the case of Dharmendra Textile Processors case (supra), the Honble Supreme Court held that the penalty under Section 11AC of the Act was mandatory, where one of the ingredients stipulated thereunder for such penalty was established against the assessee. In the case of Rajasthan Spinning and Weaving Mills (supra), the apex court had occasion to clarify its earlier ruling given in Dharmendra Textile Processors case (supra). The Honble Court clarified that any payment of duty (demanded under the proviso to Section 11AC of the Central Excise Act) by the assessee, prior to the show-cause notice or after issuance thereof, was immaterial insofar as the penal liability of the assessee under Section 11AC was concerned. This view was followed by the Honble High Courts in the cases cited by the learned SDR.