Retrospective penalty under Rule 96ZP barred for pre-1-4-1998 duty defaults.

Rule 96ZP penalty could not be imposed for a duty default committed before its introduction on 1-4-1998, because the amended provision was not given retrospective effect and a penal provision of a substantial character cannot operate retrospectively. The Department's reliance on a pre-1-4-1998 default therefore failed, and the rejection of the penalty challenge was correct.

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Issues: Whether penalty under Rule 96ZP could be imposed for a default in payment of duty committed before the rule was brought into force on 1-4-1998.

Analysis: Penalty was proposed under Rule 96ZP as amended by Notification No. 7/98-C.E. (N.T.) dated 10-3-1998. The amended provision came into force only from 1-4-1998 and was not given retrospective effect. The default relied upon by the Department related to a period prior to that date, when no penal provision of that kind was in force. A provision creating or enhancing penalty of a substantial character cannot be applied retrospectively.

Conclusion: The penalty could not be imposed for the pre-1-4-1998 period, and the rejection of the Department's challenge was correct.

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