2013 (7) TMI 791 - AT - Central Excise

Initiation of proceedings for imposition of penalty - Respondent are a rolling mill operating under compounded levy scheme under Rule 96 ZP - There was delay in discharge of monthly duty liability by the due date which attracted equal amount of penalty in terms of Rule 96 ZP (3) Held that - Hon ble Punjab & Haryana High Court in the case of CCE, Chandigarh vs. Hari Concast (P) Ltd. reported in 2009 (4) TMI 170 - PUNJAB AND HARYANA HIGH COURT has held in clear terms with regard to the provisions of Rule 96 ZO (3), that though there is no limitation period for initiating penal proceedings for failure of discharge the duty liability by the due date, the penal proceedings must be initiated within a reasonable period and it would be reasonable to adopt a period of five years in this regard and accordingly held that the penal proceedings initiated after five years are not sustainable. Similar view is again adopted by Punjab & Haryana High Court in a different case - There is no contrary judgment of any High Court or Apex Court Department s appeal is without any merit Decided against the Revenue.

Summary

Issues involved:
1. Delay in discharge of monthly duty liability under compounded levy scheme.
2. Imposition of penalty under Rule 96 ZP (3) after a delay.
3. Interpretation of limitation period for initiating penal proceedings.
4. Applicability of judgments of Hon'ble Punjab & Haryana High Court on Rule 96 ZO (3) to Rule 96 ZP (3).
5. Validity of penalty imposition post five years.

Analysis:
1. The respondent, a rolling mill, operated under a compounded levy scheme from December 1999 to March 2000. During this period, there were delays in discharging monthly duty liabilities, leading to penalties under Rule 96 ZP (3). The penalty proceedings were initiated five years later through a show cause notice, resulting in a penalty imposition of Rs. 1,66,407 by the Jurisdictional Deputy Commissioner. However, the Commissioner (Appeals) overturned this penalty citing a judgment by the Hon'ble Punjab & Haryana High Court in a similar case.

2. The Revenue appealed against the Commissioner (Appeals) decision, arguing that the penalty should stand based on the grounds presented in their appeal. The respondent's counsel referenced the Punjab & Haryana High Court's judgments, emphasizing the need for initiating penal proceedings within a reasonable period, typically within five years. They contended that the delay in initiating proceedings after five years rendered the penalty unsustainable, supported by the court's previous rulings on Rule 96 ZO (3).

3. The Tribunal, after considering arguments from both sides and reviewing the records, noted that the issue had been settled in favor of the respondent by the Punjab & Haryana High Court's judgments. As no contradictory judgments from any High Court or the Apex Court were presented, the Tribunal found no merit in the Revenue's appeal and dismissed it, upholding the decision of the Commissioner (Appeals) to set aside the penalty imposition.

Conclusion:
The judgment by the Appellate Tribunal CESTAT New Delhi upheld the decision to set aside the penalty imposed on the rolling mill under Rule 96 ZP (3) due to delays in discharging monthly duty liabilities. The Tribunal relied on the judgments of the Hon'ble Punjab & Haryana High Court regarding the limitation period for initiating penal proceedings, emphasizing the importance of acting within a reasonable timeframe, typically within five years, to maintain the validity of penalties.