Jurisdictional challenge to penalty under Rule 96ZP(3) succeeds where the penal provision was not yet in force.

Penalty under Rule 96ZP(3) of the Central Excise Rules, 1944 could not be sustained for a default occurring before the provision came into force on 1 May 1998. The jurisdictional objection concerned the very applicability of the penal clause, so it was not treated as waived by failure to raise it earlier and could be taken at the appellate stage. On that basis, the penalty was held not imposable against the assessee.

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Issues: Whether penalty could be imposed under Rule 96ZP(3) of the Central Excise Rules, 1944 for a period when the penal clause was not in force, and whether such jurisdictional objection could be raised at the appellate stage.

Analysis: The Rule 96ZP(3) penal provision came into effect only from 1 May 1998, so penalty could not be sustained for any default occurring prior to that date. The objection went to the very jurisdiction and applicability of the rule, and such a legal defect could be raised at any stage of the proceedings. On that basis, the reliance on authorities recognizing that a jurisdictional challenge is not waived by omission at an earlier stage was accepted.

Conclusion: The penalty under Rule 96ZP(3) was held not imposable against the appellant, and the objection was accepted in favour of the assessee.

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