Prospective operation of excise forfeiture rule barred action for defaults before its effective date.

Rule 8(3A) of the Central Excise Rules, 2002 could not be applied to defaults in duty payment for January 2005 to March 2005 because the forfeiture mechanism was inserted only by Notification No. 17/2005-C.E. (N.T.) and took effect from 1-4-2005. A provision that was not yet in force could not be used to penalise earlier defaults, so the forfeiture of the monthly duty-payment facility lacked legal authority for the relevant period. The forfeiture action was therefore not sustainable and was set aside.

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Issues: Whether the forfeiture of the facility for monthly payment of duty under Rule 8(3A) of the Central Excise Rules, 2002 could be invoked for defaults pertaining to the period January 2005 to March 2005, when the provision was inserted with effect from 1-4-2005.

Analysis: The default in payment of duty related to a period prior to the coming into force of Rule 8(3A). The provision for forfeiture of the monthly duty-payment facility was introduced only by Notification No. 17/2005-C.E. (N.T.) dated 31-3-2005 and became effective from 1-4-2005. A provision that had not yet come into force could not be applied to earlier defaults. The order of forfeiture, therefore, was made under a provision not available for the relevant period and was without legal authority.

Conclusion: The forfeiture action under Rule 8(3A) was not sustainable for the period prior to 1-4-2005 and was rightly set aside. The appeal succeeded.

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