2007 (7) TMI 306 - SC - Central Excise

Supreme Court: Penal Provisions Cannot Apply Retroactively

The Supreme Court ruled that invoking Section 11AC of the Central Excise Act for contravention of rules before its insertion would constitute ... Penalty - Mandatory penalty - whether the said proceeding was maintainable in view of the fact that whereas the period of alleged contravention is said to be from 5-9-1995 to 7-9-1995, the provision of Section 11AC which was inserted in the Act by Act 33 of 1996 only with effect from 28-9-1996 and as such could not have been invoked - Held that:- Section 11AC being a penal provision providing for a mandatory penalty, in our opinion, cannot be invoked in a case of this nature as the same would amount to give retrospective operation thereto which is impermissible in law - Following decision of Commissioner of Central Excise, Coimbatore v. ELGI Equipments Ltd. [2001 (1) TMI 90 - SUPREME COURT OF INDIA] - Decided against Revenue. Issues:1. Maintainability of proceeding under Section 11AC for alleged contravention of Central Excise Rules.Detailed Analysis:The Supreme Court considered the issue of maintainability of a proceeding under Section 11AC of the Central Excise Act, 1944 for alleged contravention of Rule 57GG and 4A of the Central Excise Rules, 1944. The notice was served on the respondent for contravention during a specific period, but Section 11AC was inserted in the Act after that period. The Court examined whether invoking Section 11AC in such a scenario would amount to retrospective operation, which is impermissible in law. The Court noted that Section 11AC is a penal provision with mandatory penalties and held that it cannot be applied retrospectively. The Court referred to a previous judgment in Commissioner of Central Excise, Coimbatore v. ELGI Equipments Ltd., which supported the view that applying Section 11AC in this case would be impermissible.The Court emphasized that a penal provision like Section 11AC cannot be applied retrospectively, especially in cases where the alleged contravention occurred before the provision came into effect. Citing the judgment in ELGI Equipments Ltd., the Court reiterated that retrospective application of penal provisions is not permissible in law. Therefore, the Court concluded that in the present case, there was no justification for invoking Section 11AC for the alleged contravention that predated the provision's enactment. As a result, the Court dismissed the Special Leave Petition, upholding the impugned judgment based on the non-maintainability of the proceeding under Section 11AC in the given circumstances.