Five-year limitation for penalty proceedings under Rule 96ZP(3) barred initiation after delay in duty payment.

Penalty proceedings under Rule 96ZP(3) were held to be subject to a reasonable five-year limitation, even though the rule did not expressly prescribe one. Applying the binding High Court view, the Tribunal held that proceedings for failure to pay duty by the due date could not be initiated after expiry of five years, and the penalty could not be sustained.

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Issues: Whether penalty proceedings under Rule 96ZP(3) can be initiated after expiry of five years.

Analysis: The dispute concerned delayed payment of monthly duty under the compounded levy scheme. The Tribunal followed the binding view that, although the rule did not expressly prescribe a period of limitation, a reasonable limitation of five years applies to penalty proceedings for failure to pay duty by the due date. The contrary view taken earlier by the Tribunal was not accepted in light of the Punjab and Haryana High Court judgment holding that such proceedings cannot be initiated after five years.

Conclusion: Penalty proceedings under Rule 96ZP(3) could not be initiated after expiry of five years, and the penalty could not be sustained.

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