Provisional assessment plea cannot be raised first time in penalty proceedings after duty confirmation attains finality.

A challenge to penalty was assessed on the footing of a confirmed duty demand, and the plea that clearances were provisional was not entertained because it had not been raised when the duty liability was originally decided. The Tribunal held that a ground attacking the validity of the duty confirmation cannot be introduced for the first time in subsequent penalty proceedings once the duty demand has attained finality. Penalty under Rule 96ZO(1) was therefore treated as maintainable, and interim relief was made conditional on a partial pre-deposit, with recovery stayed for the balance.

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Issues: Whether the appellant could raise the plea of provisional assessment in the penalty proceedings, and whether penalty under Rule 96ZO(1) was leviable with a pre-deposit condition under Section 35F.

Analysis: The plea that clearances were provisional and that assessment had not been finalised was not raised when the duty demand was confirmed earlier. The dispute in the present proceeding was confined to penalty, after the duty had already been confirmed. The Tribunal held that the objection to provisionality had to be taken in the proceedings in which the duty demand was decided, and it could not be introduced for the first time in the penalty appeal. On that basis, the Tribunal treated the penalty as maintainable and required a partial pre-deposit as a condition for interim relief.

Conclusion: The plea of provisional assessment was not entertained in the penalty proceedings, and the penalty was held to be leviable. Partial waiver of the pre-deposit was granted on compliance with the direction to deposit Rs. 7,50,000, with recovery stayed for the balance.

Ratio Decidendi: A ground going to the validity of the duty confirmation cannot be raised for the first time in a subsequent penalty proceeding once the duty demand has attained finality; the penalty issue then proceeds on the basis of the confirmed duty.

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