Mandatory excise penalty under Rule 57-I(4) upheld despite later introduction of the provision, with remand ordered.

Penalty under Rule 57-I(4) of the Central Excise Rules, 1944 was held to be mandatory and the Tribunal could not delete penalty and interest merely because Rules 57-I(4) and 57-I(5) were introduced on 23 July 1996. The Bombay HC noted that the provisions were not retrospective, but they applied prospectively to the assessee's case and bound the Tribunal. The order deleting penalty and interest was therefore unsustainable, and the matter was remanded for fresh decision in accordance with law.

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Issues: Whether penalty under Rule 57-I(4) of the Central Excise Rules, 1944 was mandatory and could be sustained despite the Tribunal's view that the provision came into force only later, and whether the order deleting penalty and interest could stand.

Analysis: Rules 57-I(4) and 57-I(5) of the Central Excise Rules, 1944 were introduced with effect from 23-7-1996 and were not retrospective. However, they were applicable prospectively to the assessee's case. Penalty under Rule 57-I(4) was mandatory, and the Tribunal was not justified in deleting penalty and interest merely on the ground that the rules were introduced later. The Tribunal's approach ignored the binding effect of the provision as applied to the case.

Conclusion: The deletion of penalty and interest could not be sustained. The order of the Tribunal was quashed and the appeal was remanded for fresh decision in accordance with law.

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