Reasonable time for penalty proceedings under compounded levy rules limited delayed initiation after five years.

Penalty proceedings for delayed payment of duty under the compounded levy penalty framework were held unsustainable when initiated after five years, because the Tribunal applied the High Court principle that, even without an express limitation period, such proceedings must begin within a reasonable time. Rule 96ZP(3) of the Central Excise Rules, 1944 was treated as pari materia with the provision already considered by the High Court, and no contrary High Court or Supreme Court authority was shown. On that basis, the Tribunal accepted five years as the reasonable benchmark and rejected the Revenue's challenge.

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Issues: Whether penalty proceedings for delayed payment of duty under Rule 96ZP(3) of the Central Excise Rules, 1944 were barred when initiated after about five years.

Analysis: The Tribunal noted that the issue had already been decided by the Punjab & Haryana High Court in cases concerning the corresponding compounded levy penalty provision, holding that although no express limitation period was prescribed, penalty proceedings had to be initiated within a reasonable period. The Tribunal accepted that a period of five years was the reasonable benchmark applied by the High Court, and that the provision under Rule 96ZP(3) was pari materia with the provision considered by the High Court. No contrary judgment of any High Court or the Supreme Court was shown.

Conclusion: The penalty proceedings initiated after five years were not sustainable, and the Revenue's appeal failed.

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