No retrospective penalty under Rule 96ZO(3) for delays before its effective date, limiting Revenue action

Penalty under Rule 96ZO(3) of the erstwhile Central Excise Rules, 1944 could not be imposed for a delay relating to April 1998 because the provision took effect only from 1 May 1998. The court treated the timing of the penal provision as decisive and held that the rule could not operate retrospectively to cover the earlier period. As no substantive question of law arose on that basis, the Revenue's appeal failed.

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Issues: Whether penalty under Rule 96ZO(3) of the erstwhile Central Excise Rules, 1944 could be levied for delay relating to April 1998 when the penal provision was made effective from 1 May 1998.

Analysis: The appeal arose under Section 35G of the Central Excise Act, 1944. The Court noted that the penalty provision was introduced with effect from 1 May 1998 and, therefore, for the earlier period no penalty could be charged under that rule. In view of this legal position, no substantive question of law warranting admission arose.

Conclusion: Penalty for April 1998 was not leviable under Rule 96ZO(3), and the Revenue's appeal was liable to fail.

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