Reasonable limitation for penalty proceedings under the compounded levy scheme bars delayed action beyond five years.

Penalty proceedings under Rule 96ZP(3) of the Central Excise Rules, 1944, where no express limitation period is prescribed, must be initiated within a reasonable time because they affect civil liability. Applying that principle, the Court treated five years as the reasonable limit for initiating penalty action under the compounded levy scheme. As the notice was issued after that period, the delayed proceedings were not sustainable and the penalty was rightly deleted.

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Issues: Whether penalty proceedings under Rule 96ZP(3) of the Central Excise Rules, 1944, initiated after five years, could be sustained.

Analysis: The notice for penalty was issued long after the default period. In the absence of an express statutory limitation, the governing principle applied was that proceedings affecting civil liability must be initiated within a reasonable period. The Court followed the view that five years constitutes a reasonable period for initiating such penalty proceedings under the compounded levy scheme, and held that the revenue could derive no assistance from the cited authority on limitation.

Conclusion: The penalty for the period covered by the delayed initiation of proceedings was rightly deleted, and the revenue's appeal failed.

Ratio Decidendi: Where no specific limitation is prescribed, penalty proceedings under the compounded levy scheme must be initiated within a reasonable period, and a delay beyond five years is not sustainable.

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