Retrospective penalty barred where the penal rule was not in force when the alleged contravention occurred.

Penalty under Rule 57U(6) of the Central Excise Rules, 1944 could not be imposed for a contravention that occurred before the provision came into force on 23.07.1996. The Court applied the settled principle that a penal provision has no retrospective operation unless expressly provided, and conduct predating its commencement cannot be punished under it. The impugned penalty was therefore unsustainable, the appeal was allowed, and the penalty imposed by the Tribunal was set aside.

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Issues: Whether penalty could be imposed under Rule 57U(6) of the Central Excise Rules, 1944 for a contravention that occurred before that penal provision came into force.

Analysis: The penalty provision was introduced only with effect from 23.07.1996, whereas the relevant contravention took place in 1994. A penal provision cannot be applied to events that occurred before its commencement, since that would give it retrospective operation. The Court relied on the settled principle that penalty cannot be imposed under a provision that was not in existence at the material time.

Conclusion: Penalty under Rule 57U(6) could not be imposed retrospectively and the impugned penalty was unsustainable.

Final Conclusion: The appeal was allowed and the penalty imposed by the Tribunal was set aside, with the question of law answered in favour of the assessee and against the Revenue.

Ratio Decidendi: A penal provision cannot be invoked to punish conduct that occurred before the provision came into force, as such application would amount to impermissible retrospective operation.

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