Continuing default attracts penalty under Section 11AC when suppression persists after the provision comes into force.

Section 11AC of the Central Excise Act, 1944 was held applicable to a continuing default where the suppression or wrongful conduct began earlier but persisted after the provision came into force. The Court distinguished tax assessment from penalty, reasoning that the relevant law is the one in force when the default continues and is detected, not merely when the concealment first started. Applying the principle that a continuing wrong attracts the law during its continuance, the Court declined to remand the matter and upheld invocation of Section 11AC on the facts.

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Issues: (i) Whether Section 11AC of the Central Excise Act, 1944 is prospective and can apply where the show-cause notice relates to a period partly prior to its insertion, and whether the matter required remand for applying the Supreme Court's decision in Dharmendra Textile Processors.

Analysis: Section 11AC, though penal in nature, was held to govern cases where the default or suppression continued into the period when the provision was in force. The relevant consideration was not merely the commencement of the concealment period, but the law prevailing when the wrongful act was discovered and the continuing default persisted. The Court distinguished the assessment of tax from imposition of penalty and treated the default as a continuing one, relying on the principle that a continuing wrong attracts the law in force during its continuance.

Conclusion: The question was answered in the negative. Section 11AC could be invoked on the facts, and no remand was warranted.

Final Conclusion: The appeal was rejected because the penalty provision was held applicable to a continuing default that extended into the period when Section 11AC was operative.

Ratio Decidendi: A penal provision may apply to a continuing default if the default persists after the provision comes into force, even though the conduct commenced earlier.

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