Prospective penalty under Section 11AC does not bar pre-existing Section 173Q where demand spans pre- and post-commencement periods.

Penalty for a demand spanning periods both before and after 29-9-1996 could not be challenged on the basis that Section 11AC was prospective only, because the record showed invocation of both Section 11AC and the pre-existing Section 173Q. The assessee's interest objection under Section 11AB had already been decided in its favour and was not open for reconsideration. On that basis, the modification plea was held not maintainable and was rejected.

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Issues: Whether the modification application could be allowed on the ground that penalty under Section 11AC was not applicable for the period prior to 29-9-1996 and that the demand also attracted Section 173Q for the period in question.

Analysis: The interest issue under Section 11AB was already decided in favour of the assessee and did not survive for reconsideration. On penalty, the record showed invocation of both Section 11AC and Section 173Q. Since the confirmed clearances covered periods both before and after 29-9-1996, and Section 173Q was available for the earlier period, the plea that penalty could not be imposed for the entire demand on the basis of Section 11AC alone was not accepted.

Conclusion: The modification application was not maintainable on the stated ground and was rejected.

Ratio Decidendi: Where the demand covers periods both before and after the commencement of Section 11AC, and penalty is also invocable under the pre-existing penal provision, a modification plea based solely on the prospective operation of Section 11AC does not warrant interference.

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