Retrospective penalty barred where Section 11AC was not in force during the relevant excise period.

Section 11AC of the Central Excise Act, 1944 could not be applied to conduct occurring before it came into force on 28 September 1996. Because the relevant period was 1994-1995, the penalty provision was not in existence at the time of the alleged default and could not support the impugned demand. Findings on clandestine removal and manufacture did not change the legal position on retrospectivity. The penalty was therefore not attracted and was set aside.

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Issues: Whether penalty under Section 11AC of the Central Excise Act, 1944 could be imposed for a period prior to its enactment.

Analysis: The period involved was 1994-1995, whereas Section 11AC came into force only on 28.09.1996. The provision was therefore not in existence during the relevant period and could not be invoked for the impugned demand. The other findings on clandestine removal and manufacture did not alter the legal position on applicability of the penalty provision.

Conclusion: Penalty under Section 11AC of the Central Excise Act, 1944 was not attracted and was set aside.

Ratio Decidendi: A statutory penalty provision cannot be applied to conduct occurring before the provision came into force.

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