Retrospective penalty under Central Excise law barred; Section 11AC applies only from its insertion and against the statutory assessee.

Section 11AC of the Central Excise Act, 1944 operates only from its insertion on 28 September 1996 and cannot be applied retrospectively to periods before commencement. The document also notes that the statutory penalty was directed against the assessee-company, so Revenue's challenge against employees was not maintainable on that footing. Penalties sustained under Rule 209A of the Central Excise Rules, 1944 against proprietors or managers were left undisturbed, as no separate basis was shown for interference. The appellate order was therefore maintained, with the reduced and sustained penalties remaining in place.

---

---

Issues: (i) Whether penalty under Section 11AC of the Central Excise Act, 1944 could be imposed for a period prior to its insertion. (ii) Whether the Revenue's appeals challenging penalty against employees and the proprietors/managers were sustainable.

Issue (i): Whether penalty under Section 11AC of the Central Excise Act, 1944 could be imposed for a period prior to its insertion.

Analysis: Section 11AC was inserted with effect from 28.09.1996, and penalty under that provision could operate only from that date. A penalty provision creating a statutory liability cannot be applied retrospectively to periods preceding its commencement.

Conclusion: Penalty under Section 11AC could not be imposed retrospectively, and the Revenue's challenge on this ground failed.

Issue (ii): Whether the Revenue's appeals challenging penalty against employees and the proprietors/managers were sustainable.

Analysis: The statutory penalty under Section 11AC was directed against the assessee-company, and the appeals against employees were not maintainable on that footing. The order also sustained penalty under Rule 209A of the Central Excise Rules, 1944 against the proprietors/managers, and no separate basis survived for interfering with that part of the order.

Conclusion: The appeals against the employees were not maintainable, and the remaining challenge to the penalties did not succeed.

Final Conclusion: The Revenue failed to establish any ground for interference with the appellate order, and the penalties as reduced and sustained by the Commissioner (Appeals) were left undisturbed.

Ratio Decidendi: A penalty provision cannot be enforced retrospectively before its insertion, and liability under Section 11AC of the Central Excise Act, 1944 is confined to the statutory assessee against whom the provision operates.

---