JUDGMENT : AKIL KURESHI, J. 1. This appeal is filed by the assessees challenging the judgment of the CESTAT. Following question of law was framed at the time of admission of appeal. “Whether penalty was liable to be imposed on the assessee in case where duty had been deposited by the assessee before issue of show cause notice?” 2. Brief facts are as under. 3. That the appellant no.1 is a partnership firm. Appellant nos.2 and 3 are the parters of the firm. Appellant no.4 is the authorized signatory of the firm. The appellant is engaged in the manufacturing activity mainly manufacturing man made processed fabrics. Premises of the firm were subjected to search by the Excise Authorities on 28.11.1998, during which, the partner of the firm admitted past clandestine removal of the goods worth Rs.5.47 lakhs (rounded off) without payment of the duty. The raiding party also found processed fabric valued at Rs.5.74 lakhs (rounded off) which was not accounted in the record. Further quantities were found which were also not entered in the record. Such goods were seized. 4. Show cause notice was issued for confiscation of the goods, recovery of the duty with penalty. Adjudicating Authority passed an order dated 29.03.2001, in which, he provided as under: “(1) I order to confiscate the seized goods i.e. 644 pcs of Proc MMF admeasuring 60260.25 L.Mtrs v/a Rs.1039257. However, the Mills may redeem these goods on payment of Redemption fine of Rs.2,24,085/0 [Rupees two lakhs twenty four thousand and eighty five only] since the seized goods have been released provisionally on execution of B11 Bond for full value of the seized goods, backed by Bank Guarantee of Rs.224085.00 and the same has not been produced before me during the proceeding as required in B11 bond, I order to enforce the B11 Bond and appropriate the Bank Guarantee furnished by the Mills for Rs. 224085.00 in terms of B11 Bond towards value of seized goods, towards payment of redemption fine. (2) I confirm the C. Ex. duty of rs. 207851.00 [comprising BED Rs. 124711.00 + AED Rs. 83140.00] leviable on the seized goods and subsequently paid by them vide PLA E. no. 341 to 346 dated 23/12/98, RG23C Pt. 224085.00 in terms of B11 Bond towards value of seized goods, towards payment of redemption fine. (2) I confirm the C. Ex. duty of rs. 207851.00 [comprising BED Rs. 124711.00 + AED Rs. 83140.00] leviable on the seized goods and subsequently paid by them vide PLA E. no. 341 to 346 dated 23/12/98, RG23C Pt. II Register E. No. 324 dated 23/12/98 and deemed credit Register E. No. 275 to 277 dated 23/12/98 at the time of clearance under subsection (I) of Section 11A of Central Excise Rules, 1944. (3) I also impose a penalty of Rs.2,00,000/- [Two lakhs only] on the Mills under Rule 173Q(1) of Central Excise Rules, 1944. (4) I impose a penalty of rs.1,00,000/- [Rupees one lakh only] on Shri Dhiraj Kumar Manikchand Begani, Karta of the mills, Rs.5,000/-[Rupees five thousand only] on Shri Gauri Shanker Jainarayan Sharma, Authorised Signatory of the mills and Rs. 1,00,000/- [Rupees one Lakh only] on Shri Ashok Kumar Ghewarchand Begani, Partner of the Mills. ” 5. Thus, the Adjudicating Authority while confiscating the seized goods, offered return of the same upon payment of redemption fine of Rs.2,24,085/. He confirmed excise duty of Rs.2,07,851/. He imposed penalty of Rs.2 lakhs on the firm under rule 173Q(1) of the Central Excise Rules. He imposed personal penalty of Rs.1 lakh each on the two partners and of Rs.5,000/on the authorized signatory of the firm. 6. This order was challenged by the appellants before the Commissioner of Appeals. He dismissed the appeal by a detailed order. He noted that Ashokkumar Begani, one of the partners of the firm had admitted to the clandestine removal of the goods and discrepancy in the stock. This was also supported by the statement of one Gaurishankar Sharm, Authorized Signatory of the firm. None of these statements were retracted. 7. The appellants carried the matter in appeal before the Tribunal. It appears that in the appeal, the appellants had challenged all parts of the order including the confiscation of goods and imposition of duty and penalty. The appeal was heard in absence of the advocate of the appellants. The Tribunal examined all issues and upheld the orders passed by the excise authorities. 8. The appellant thereafter sought rectification of the order principally on the ground that certain decisions were not referred by the Tribunal. The appeal was heard in absence of the advocate of the appellants. The Tribunal examined all issues and upheld the orders passed by the excise authorities. 8. The appellant thereafter sought rectification of the order principally on the ground that certain decisions were not referred by the Tribunal. In such application, the appellants confined their grievances to the imposition of penalties mainly contending that since the duty was paid even before issuance of show cause notice, penalty should not have been imposed. The Tribunal rejected such application, upon which, present appeal has been filed. 9. As can be seen from the question of law framed, the appellants have confined this appeal to the question of penalty. Learned counsel for the appellants raised two contentions in this respect. Firstly, that the entire duty was paid even before issuance of show cause notice and the penalty therefore could not have been imposed. In this context, he relied on the following judgments: I. In case of Commr. of Cus. & C. Ex. Noida v. Supreme Industries Ltd. reported in 2016 (341) E.L.T. 607 (All.), in which, in the context of section 11AC of Central Excise Act, 1944, it was observed that if the duty is paid by the assessee even before issuance of show cause notice, imposing penalty under section 11AC and interest under section 11AB is issued, this would show that there was no question of any fraud, misrepresentation or suppression of facts and therefore penalty and interest should not be levied. II. For the same purpose, reference is also made to the decision of Karnataka High Court in case of Commissioner of C. Ex., Mangalore v. Shree Krishna Pipe Industries, reported in 2004 (165) E.L.T. 508 (Kar.). 10. The second contention of the counsel was that in any case, penalty having been imposed on the firm, no separate penalty could be imposed on the partners. In this context, he relied on the following decisions of this Court. I. In case of Pravin Shah v. CESTAT, reported in 2014 (305) E.L.T. 480 (Guj.). II. In case of Commissioner of Central Excise v. Jai Prakash Motwani, reported in 2010 (258) E.L.T. 204 (Guj.). 11. Before adverting to statutory provisions and legal contentions, we may recall, in the present case, upon a raid it was revealed that the manufacturers were involved in past clandestine removal of goods without payment of duty. II. In case of Commissioner of Central Excise v. Jai Prakash Motwani, reported in 2010 (258) E.L.T. 204 (Guj.). 11. Before adverting to statutory provisions and legal contentions, we may recall, in the present case, upon a raid it was revealed that the manufacturers were involved in past clandestine removal of goods without payment of duty. Unaccounted goods were also found at the factory premises. All these aspects were admitted by the partner of the firm and the manager of the firm in their statements. These statements were never retracted. In this context, show cause notice came to be issued for confiscation of goods, levying of duty and imposition of penalty. The Adjudicating Authority confirmed the demands. Appellate Authorities upheld the order. 12. Rule 173Q of the Central Excise Rules, 1944, pertains to confiscation and penalty. Sub rule (1) thereof, inter alia, provides that subject to the provisions contained in section 11AC of the Act and subrule (4) of rule 57I and subrule (6) of rule 57U, if any manufacturer, producer, registered person of a warehouse or a registered dealer; (a) removes any excisable goods in contravention of any of the provisions of these rules; or, (b) does not account for any excisable goods manufactured, produced or stored by him then all such goods shall be liable to confiscation of the manufacture, producer, registered person of a warehouse or a registered dealer shall be liable to a penalty not exceeding three times the value of the excisable goods in respect of which such contravention have been committed or rupees five thousand whichever is greater. 13. This rule does not contain any specific condition for waiver of the penalty in case the duty is deposited before issuance of show cause notice. Section 11AC of the Act did contain such provision for waiver of penalty in cases not involving fraud etc. We are conscious that some of the Courts have extended such principle of waiver of penalty in the context of rule 173Q also when facts so justified and particularly when duty is paid even before issuance of show cause notice. 14. Payment of duty before issuance of show cause notice however carries an important connotation of the assessee not contesting the liability. Mere depositing the amount does not amount to payment of duty. Payment of duty would arise when the liability is accepted. 14. Payment of duty before issuance of show cause notice however carries an important connotation of the assessee not contesting the liability. Mere depositing the amount does not amount to payment of duty. Payment of duty would arise when the liability is accepted. This would have an important element of avoiding litigation. Ordinarily, the instances of payment of duty immediately upon being pointed out short payment would be cases falling outside fraud, willful misstatement etc. In either cases, the important element would be that the assessee accepts the liability and surrenders the unpaid duty without a contest. 15. In the present case, the assessee opposed the show cause notice proceedings all throughout upto the stage of Tribunal. Even before the Tribunal, the appeal was not confined to penalty but on the order passed by the Adjudicating Authority and confirmed by the Appellate Authority regarding confiscation of goods and confirmation of excise duty demand. This was thus, clearly not a case where the assessee had paid the duty even before issuance of show cause notice. The assessee therefore cannot claim waiver of penalty on this count. 16. However, on the second limb, the counsel for the appellants is correct. This Court in case of Jai Prakash Motwani, (supra) held that once penalty is imposed on the partnership firm, no separate penalty can be imposed on the partners. This has been followed in later judgment in case of Pravin Shah (supra). 17. Considering such aspects of the matter, appeal is allowed in part. Penalties on the partners of the firm are deleted. Rest of the order remains unchanged. Question answered accordingly. 18. Tax Appeal is disposed of accordingly.