Rule 96ZO penalty survives delay challenge where Section 11A limitation principles do not apply to compounded levy duty proceedings.

Penalty under Rule 96ZO for delayed payment of compounded levy duty was held to operate within its own statutory framework, distinct from Section 11A of the Central Excise Act, 1944. The absence of an express limitation period in Rule 96ZO did not permit importing Section 11A's recovery or extended-limitation structure, and delay by the authorities in starting proceedings did not create a right to escape the statutory consequence. The challenge based on long delay and reasonable period therefore failed, and the penalty was upheld.

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Issues: Whether penalty under Rule 96ZO for delayed payment of compounded levy duty could be set aside on the ground that the proceedings were initiated after a long delay and that the principles underlying Section 11A of the Central Excise Act, 1944 or the concept of reasonable period barred the action.

Analysis: The liability to pay duty under the compounded levy scheme and the consequential penalty under Rule 96ZO operated under a specific statutory framework distinct from the scheme of recovery and extended limitation in Section 11A of the Central Excise Act, 1944. The absence of an express limitation period in Rule 96ZO did not justify importing the limitation structure of Section 11A or treating proceedings under the rule as dependent on the conditions required for invocation of the extended period. The statutory scheme imposed a clear obligation on the assessee who had chosen the payment method, and delay by the authorities in initiating penalty proceedings did not create any enforceable right in favour of the defaulter to avoid the statutory consequence.

Conclusion: The challenge to the penalty on the ground of delay and reasonable period failed, and the penalty under Rule 96ZO was upheld against the assessee.

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