TaxTMI 
TaxTMI 
Comments/suggestions invited on Draft Adjudication Manual
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....r other subordinates for the final decision of the cases 25 18 Expeditious disposal of cases of offences under the act and rules 25 19. Time schedule for expeditious adjudication of offences and seizure cases 26 20. Issue of show cause notice on receipt of audit objections from cera and adjudication thereof 28 21. Speaking order 29 22. Form of adjudication order in Central Excise cases 29 23. Corrigendum 31 24. Penalties and Confiscation 33 25. Mandatory penalty under section 11AC of Central Excise Act, 1944 33 26 Disposal of goods confiscated 36 27. Penalties and confiscation in customs 37 28. Mandatory penalty under section 114 A of Customs Act, 1962 38 29. Presumption of culpable mental state 39 30. Penalties in the case of service tax 39 31. Provisional release of things seized 44 32. Redemption fine 46 33. Release of confiscated goods beyond the time limit prescribed in the order-in-original/ordering appeal clarification regarding 46 34. Interest 46 35. Refunds 50 36. Refund of duty paid in case of time- barred demand 54 37. Determination of mens rea in departmental adjudications 55 38. Confiscation of goods 56 ....
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....of correction is in place and working. It is the requirement of law that correction process of judgments should not only appear to be implemented but also seem to have been properly implemented. These functions, therefore, cast a heavy responsibility on the officers invested with the powers of adjudication and confiscation to use it with utmost care and caution, free from any prejudice or bias, so that the innocent does not suffer by any injustice done to him and the real offender does not escape the punishment provided by law. Central Excise, Customs and Service Tax laws are self-contained laws. Besides containing the provisions for levy of duty, adjudication of matters relating to the provision of the Law is also provided for in the legal provisions e.g. for demand of duty, credit availed, determination of classification, valuation, confiscation and imposing penalty. The adjudication is done by the departmental officers, and in this capacity they act as quasi- judicial officers. It is an important function of the officers and casts heavy responsibility on the officers invested with the powers of adjudication to use it with utmost care and caution, free from any prejudice or bi....
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.... under the Central Boards of Revenue Act, 1963 (54 of 1963), Commissioner of Central Excise (Appeals) or Appellate Tribunal; 5 (b) "Central Excise Officer" means the Chief Commissioner of Central Excise, Commissioner of Central Excise, Commissioner of Central Excise (Appeals), Additional Commissioner of Central Excise, [Joint Commissioner of Central Excise] [Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise] or any other officer of the Central Excise Department, or any person (including an officer of the State Government) invested by the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963) with any of the powers of a Central Excise Officer under this Act. (ii) As per section 2 of Customs Act, 1962: "adjudicating authority" means any authority competent to pass any order or decision under this Act, but does not include the Board, Commissioner (Appeals) or Appellate Tribunal: "Commissioner of Customs", except for the purposes of Chapter XV, includes an Additional Commissioner of Customs; Moreover, section 4 of Customs Act, 1962 empowers the Central Board of Customs and Excise to ap....
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....ed them with all the powers, to be exercised by them throughout the territory of India, of an officer of Central Excise of the rank also specified therein, with the powers of a Central Excise Officers conferred under the said Act and rules made thereunder with effect from 1st July, 2001. (F.No.208/10/2001-CX.6) Vide Notfn No. 39/2001-CE (NT) dt 26.06.2001 the Central Board of Excise and Customs has appointed for specified purposes the officers of Central Excise specified therein and invested them with all the powers of Central Excise Officers also specified therein to be 7 exercised within such jurisdiction and for such purposes as specified with effect from 1st July, 2001. (F.No.208/10/2001-CX.6) Rate of duty in case of clandestine removal :- For determination of tariff valuation or the rate of duty under rule 9A (present Rule 5) in cases of unauthorized, illegal or clandestine removal of goods, if the date of removal of goods is known then it would be determined under clause (ii) of sub-rule (1) of rule 9A (present Rule 5). Where, however, the date of removal is not known then duty liability will be determined in terms of sub- rule(5) of rule 9A and as per existing....
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....1-11-2003 (F. No. 208/27/2003-CX.6(Pt.) and No. 806/3/2005-CX., dated 12-1-2005 (F.No. 208/27/2003-CX.6)] Multiple SCNs involving identical issues: In case where a number of show cause notices have been issued depending on monetary limits, period of time, etc. but on the same issue answerable to different adjudicating authorities, attention is invited to CBEC's Circular No.362/78/97-CX dated 9.12.97 (F.No. 208/03/95-CX.6) whereby it has been clarified that all the show cause notices involving the same issue will be adjudicated by the adjudicating authority competent to decide the cases involving the highest amount of duty. Determination of competent adjudicating authority in cases where the excisable goods are non-existent and the question whether value of such goods or magnitude of offence should be the Criterion : The value of goods is not relevant for the purpose of determination of the competence of the adjudicating authority when it is not proposed to confiscate the goods; either because the goods are not available for confiscation or for any other reason. The amount of penalty to be imposed must, however, be within the powers of that authority. The value of goods ....
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....ents in the notification of the Government of India, Ministry of Finance, Department of Revenue, No. 30/2005 - Service Tax, dated 10th August 2005, published vide No. G.S.R. 527(E), dated the 10th August, 10 2005, namely in the said notification, for the Table therein, the following Table has been substituted :- Table Sr.No Central Excise Officer Amount of service tax or CENVAT credit specified in a notice for the purpose of adjudication under Section 83A (1) (2) (3) (1) Superintendent of Central Excise Not exceeding Rs. one lakh (excluding the cases relating to taxability of services or valuation of services and cases involving extended period of limitation.) (2) Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise Not exceeding Rs. five lakhs (except cases where Superintendents are empowered to adjudicate.) (3) Joint Commissioner of Central Excise Above Rs. five lakhs but not exceeding Rs. fifty lakhs (4) Additional Commissioner of Central Excise Above Rs. twenty lakhs but not exceeding Rs. fifty lakhs (5) Commissioner of Central Excise Without limit. (F. No. 137/68/2010 - CX.4) Further vide Circular No. 130/12/2010....
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....saction should be adjudicated upon separately and penalties 12 totaling up to the maximum limits where ever prescribed may where necessary be imposed in respect of acts constituting each transaction in the manner provided in (b) above. (iv) Where an adjudicating officer considers that a penalty exceeding the maximum limit prescribed for him in Section 33(B) of the Central Excises Act, 1944, Sections 28 and 122 of Customs Act, 1962 or Section 83A of Finance Act, 1994 is deserved in respect of acts constituting any particular transaction, he should refer the case for original adjudication to a superior officer competent to adjudge the desired penalty. Adjudication of the one and the same case twice :- Adjudicating officers should guard against passing two formal adjudication orders on one and the same case. The legal position in this respect is that, where a matter has already been adjudicated by the competent authority, and another order of adjudication is passed relating to the same transaction subsequently, the second order is a nullity. The authority who undertakes the enquiry resulting in the second adjudication acts without jurisdiction. The second order being a ....
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.... context should be in a given case, must depend to a great extent on the fact and circumstances of that case, the frame-work of the statute under which the enquiry is held. The old distinction between a judicial act and an administrative act has withered away. Even an administrative order which involves civil consequences must be consistent with the rules of natural justice. Expression 'civil consequences' encompasses infraction of not merely property or personal rights but of civil liberties, material deprivations, and non- pecuniary damages. In its wide umbrella comes everything that affects a citizen in his civil life. The first and foremost principle is what is commonly known as audi alteram partem rule. It says that no one should be condemned unheard. The Show Cause Notice is the first limb of this principle. It must be precise and unambiguous. It should appraise the party determinatively the case he has to meet. The order should not travel beyond the SCN. However, if a new ground is required to be considered, the same could be done by way of putting the party to notice subject to law of limitation. [refer SURESH SYNTHETICS 2007 (216) E.L.T. 662 (S.C.)]. Further, time given....
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....ding of reasons could lead to dual infirmities; firstly, it may cause prejudice to the affected party and secondly, more particularly, hamper the proper administration of justice. A judgment without reasons causes prejudice to the person against whom it is pronounced, as that litigant is unable to know the ground which weighed with the Court in rejecting his claim and also causes impediments in his taking adequate and appropriate grounds before the higher Court in the event of challenge to that judgment 15 The Hon'ble SC has further elaborated the legal position in the case of Siemens Engineering and Manufacturing Co. of India Ltd. v. Union of India and Anr. [AIR 1976 SC 1785], as under :- "6 ....... If courts of law are to be replaced by administrative authorities and tribunals, as indeed, in some kinds of cases, with the proliferation of Administrative Law, they may have to be so replaced, it is essential that administrative authorities and tribunals should accord fair and proper hearing to the persons sought to be affected by their orders and give sufficiently clear and explicit reasons in support of the orders made by them. Then alone administrative authorities and tri....
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....procedure. It requires that the Adjudicating authority shall, give an opportunity of being heard to a party in a proceeding, if the party so desires. Further, section 35Q of the Central Excise Act, 1944 provides for appearance by authorized representative before a central excise officer or Appellate Tribunal in connection with any proceedings. The Adjudicating authority may, if sufficient cause is shown, at any stage of proceeding referred to above, grant time, from time to time, to the parties or any of them and adjourn the hearing for reasons to be recorded in writing. However, no such adjournment shall be granted more than three times to a party during the proceeding. The above also applies to cases of Service Tax in terms of section 73 of the Finance Act, 1994, wherein sub-section (2) reads as follows: "(2) The Central Excise Officer shall after considering the representation, if any, made by the person on whom notice is served under sub-section (1), determine the amount of service tax due from, or erroneously refunded to, such person (not being in excess of the amount specified in the notice) and thereupon such person shall pay the amount so determined." Moreover, the....
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.... of adjudication without rehearing the party :- When an adjudicating officer is likely to be transferred or promoted, it should be ensured that in all cases, where a hearing has been given on request, but formal orders have not been issued, the drafting of these orders is also on a top priority basis so that formal orders in all such cases are issued by the outgoing officer before relinquishing charge. If despite this precaution, old case remain undisposed of, the successor in office should offer a fresh hearing to the party as mentioned hereinabove before issuing the formal order. A special mention of such cases should be made in the handing over notes of the outgoing officer so that they do not escape the notice of the successor. (F.No. l00/1/62 L.C.I.) 18 Right to Inspect: The noticee has a right to inspect or to get copies of all the documents/records relied upon in the show cause notice (refer 1993 (65) E.L.T. 357 (S.C.), 1989 (39) E.L.T. 329 (S.C.) and 1997 (95) E.L.T. 251(Tri). Cross Examination: The right to cross-examination is not an absolute right and the question whether the petitioner was entitled to cross-examination is a question which may largely depend ....
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.... Section 9D has been elaborated by the High Court of Delhi in the case of M/s J&K Cigarettes vs. CCE [2009(242)ELT 189(Del)]. As such , applicability of statement(s) relied upon while proving the offence should be discussed in the adjudication process. The relevant para is quoted below: "32. Thus, we summarize our conclusions as under :- (i) We are of the opinion that the provisions of Section 9D(2) of the Act are not unconstitutional or ultra vires; (ii) while invoking Section 9D of the Act, the concerned authority is to form an opinion on the basis of material on record that a particular ground, as stipulated in the said Section, exists and is established; (iii) such an opinion has to be supported with reasons; (iv) before arriving at this opinion, the authority would give opportunity to the affected party to make submissions on the available material on the basis of which the authority intends to arrive at the said opinion; and (v) it is always open to the affected party to challenge the invocation of provisions of Section 9D of the Act in a particular case by filing statutory appeal, which provides for judicial review." The provisions of section 9D of Centr....
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....he purposes of this Act and the rules made thereunder and shall be admissible in any proceedings thereunder, without further proof or production of the original, as evidence of any contents of the original or of any fact stated therein of which direct evidence would be admissible. (2) The conditions referred to in sub-section (1) in respect of a computer print out shall be the following, namely :- (a) the computer print out containing the statement was produced by the computer during the period over which the computer was used regularly to store or process information for the purposes of any activities regularly carried on over that period by the person having lawful control over the use of the computer; 21 (b) during the said period, there was regularly supplied to the computer in the ordinary course of the said activities, information of the kind contained in the statement or of the kind from which the information so contained is derived; (c) throughout the material part of the said period, the computer was operating properly or, if not, then any respect in which it was not operating properly or was out of operation during that part of that period was not such as t....
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....propriate equipment; (b) whether in the course of activities carried on by any official, information is supplied with a view to its being stored or processed for the purposes of those activities by a computer operated otherwise than in the course of those activities, that information, if duly supplied to that computer, shall be taken to be supplied to it in the course of those activities; (c) a document shall be taken to have been produced by a computer whether it was produced by it directly or (with or without human intervention) by means of any appropriate equipment. Explanation. - For the purposes of this section, - (a) "computer" means any device that receives, stores and processes data, applying stipulated processes to the information and supplying results of these processes; and (b) any reference to information being derived from other information shall be a reference to its being derived therefrom by calculation, comparison or any other process. The provisions of section 36A and 36B of Central Excise Act, 1944 apply mutatis mutandis to cases of Service Tax in terms of section 83 of Finance Act, 1994. The statutory provisions in this regard in customs cas....
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....manded of the petitioner. If instead of mentioning the amount, the show cause indicates the difference between the duty demanded and the duty not paid that would be sufficient compliance. Even if there was a total silence to specify any amount all that this would mean that the petitioner would be entitled to ask the respondents to indicate the specified amount to the petitioner and then to give his reply to it. But that would not mean that the notice per se would become illegal. The requirements of specifying the amount is a salutory one and must in all cases be followed but the absence of it would not make the notice bad. The Delhi High Court ruled that the Bombay High Court decision in J.B.A. Printing Inks Ltd. v. UOI, 1980 (6) ELT 0121 (Bom.), did not lay down the correct law. Thus the single Judge decision of the Bombay High Court has been clearly over ruled by the two Judge decision of the Delhi High Court. 22. In the case of Gwalior Rayon Mfg. (Wvg.) Co. v. UOI, 1982(04)LCX0015 Eq 1982 (010) ELT 0844 (MP), the Madhya Pradesh High Court at Jabalpur had also affirmed the same position when it was held that merely because necessary particulars have not been stated in th....
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....e narration of facts in an adjudication order has to be drafted by the adjudicating officer himself. From this point of view, any positive suggestion in regard to the penalty etc. whether in an office note or elsewhere is liable to be regarded as an interference with the functions of the Adjudicating Officer thereby vitiating the decision. Office notes should not, therefore, go to the extent of recommending the final decision or the actual penalty, in the adjudication of offence cases. 25 Expeditious Disposal of cases of offences under the Act and Rules :- Offences under the Act and Rules cited in the preceding paragraph can be mainly divided into two parts (1) cases where offending goods exist and are available for seizure, and (2) cases where the goods are not involved. Most of the cases under the Central Excise Act, 1944 and Rules made thereunder and the Customs Act, 1962 and Rules made thereunder would be covered by item (1). In cases involving seizure of goods the responsibility of the officers is much more than in the cases covered by item (2), for the reason that any delay in the process of adjudication, is likely to cause deterioration of the goods pending adjudica....
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.... months from the date of service of the show cause notice; (c) for cases to be adjudicated within the competence of a Gazetted Officer of Customs lower in rank than an Assistant Commissioner of Customs, three months from the date of serving of the show cause notice. In case the above time period cannot be observed in a particular case, the adjudicating officer shall keep his supervisory officer informed regarding the circumstances which prevented the observance of the above time frame, and the supervisory officer would fix an appropriate time frame for disposal of such cases and monitor their disposal accordingly. Option to redeem: The confiscated goods should be permitted to be redeemed in accordance with the provisions of Central Excise Act, 1944.The relevant provisions read as follows: SECTION 34. Option to pay fine in lieu of confiscation. - Whenever confiscation is adjudged under this Act or the rules made thereunder, the officer adjudging it, shall give the owner of the goods an option to pay in lieu of confiscation such fine as the officer thinks fit. 27 If the goods are not re-deemed they should be disposed of in auction within one month from the date of e....
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....of Facts (SOF). A few SOF are made into Draft Audit Para (DAP). Generally, a LAR is converted into SOF within a period of 6 months. In some cases, it has been noticed that objections raised in LAR is not accepted by the department but the reply given by the department is also not accepted by AG's office. Further, if the said LAR is not converted to SOF/DAP, the said objection remain unsettled and these show cause notices are transferred to Call Book. For these cases, jurisdictional Commissioners are required to hold meeting with local DAGs to settle the objection. However, in many cases, these issues are not settled for a long period. 3. The issue has been examined. It is clarified that in cases where a LAR has not been admitted by the department, and the same is not converted into SOF/DAP by CERA, then the SCNs issued on account of said LAR may be adjudicated after a period of one year from the date of sending the reply to the LAR. However, before adjudication, it must be ensured that the LAR has not been converted into SOF/DAP. 4. Instruction issued by Circular No. 5/83-CX.6, dated 10-3-83 is modified accordingly. 5. Receipt of this circular may kindly be acknowledged. ....
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....tion of the officers who seized the goods etc. or have any other relevance to the facts of the case must be specifically stated in the order of adjudication. In short an adjudication order would not be considered to be complete unless it answers the questions-what, who, how, when, where and why? (iv) General principles of adjudication set out in sub-paragraph (ii) & (iii) above should be followed in respect of Service Tax or Customs cases as well. (v) A direct penalty may be adjudged in addition to the confiscation of the goods if the merits of the case so warrant. Orders of confiscation should, however, invariably prescribe an amount of fine in lieu of confiscation as required by Section 34 of the Central Excises 30 Act, 1944 or Section 125 of Customs Act, 1962; the amount of such fine should not exceed the value ('value' here means ex-duty value) of the goods. However, the confiscation held in cases of importation or exportation of prohibited goods is absolute and can not be allowed to be redeemed. Demand for Central Excise Duty on confiscated goods not to be included in the body of the adjudication order :- In respect of those goods which are confiscated and an....
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....officer While reviewing an Order-in-Original passed by a Commissioner, it was observed that the said Commissioner made substantive changes in his order by issuing a corrigendum nearly 10 months after issue of the order-in-original. It was felt, prima facie, that the substantive changes brought about by the corrigendum may be beyond the scope of Section 154 of the Customs Act, 1962 and may thus not stand judicial scrutiny by the appellate authorities. The Board, therefore, referred the matter to the Law Ministry and sought their opinion whether the corrigendum issued subsequent to Adjudication Order passed by the Commissioner is legally valid and tenable considering its nature and relevance to the adjudication order as well as the Provisions of Section 21 of the General Clauses Act. The opinion received from the Law Ministry is reproduced below for your information and guidance. The above advice of the law Ministry may please be noted by all concerned for information guidance and necessary action. Where any significant change in the order becomes necessary after the order has been issued which cannot be termed as clerical or arithmetical or typographical mistake, proposals ....
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....he rights of citizens, the very nature of the power would inevitably impose and limitation that the power should be exercised in conformity with the principles of natural justice. Whether or not such an authority or body is a tribunal, would depend the nature of the power conferred on the authority or body, the nature of the rights of citizens, the decisions of which falls within the jurisdiction of the said authority or body, the other relevant circumstances. 4. Commissioner of Customs is no doubt a quasi-judicial body required to work within the provisions of law. Neither the powers of review nor correction to the order is available under the Customs Act to the Commissioner of Customs to exercise such powers. He becomes functus officio after signing the adjudication order and, therefore, he cannot lay his hands again on the order. The corrigendum is tantamount to review of the decision which is not provided under Law, and therefore, we are of the view that this impugned order is not legally sustainable notwithstanding Section 21 of the General Clauses Act". Sd/- Addl.Legal Advisor Penalties and Confiscation Penalty is imposable under Section 11AC of Central Excise Act....
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....to 50% of the duty, it has also been specifically provided that even in cases where show cause notice has been issued involving extended period of limitation (fraud, collusion, willful mis-statement etc.) with penalty equal to the duty, the penalty can be 34 remitted to 50% if the Central Excise officer is of the opinion that the details of the transactions in respect of which the demand notice has been issued have been duly recorded by the person charged with duty in the specified records. (c) The provisions of the existing sub-section (1A) of section 11 have been omitted. The facility of compounding the penalty amount has been confined only to this new category and if the person chargeable with duty (for an extended period) pays the duty in full or part along with interest before the issuance of a show cause notice, the penalty shall stand reduced to 1 % per month but not exceeding 25% of the duty. However if the duty alongwith interest is paid within thirty days of the issuance of adjudication order, the penalty would be 25% of the duty. (ii) Rule 25 of the Central Excise Rules, 2002 provides for penalty on any producer, manufacturer, registered person of a warehouse....
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....order, incorporating the defence arguments given by such person or his authorised representative. As per Rule 28 of the Central Excise Rules, when any goods are confiscated under these rules, such thing shall thereupon vest in the Central Government. Accordingly, the Central Excise Officer adjudging confiscation shall take and hold possession of the things confiscated, and every Officer of Police, on the requisition of such Central Excise Officer, shall assist him in taking and holding such possession. Rule 30 of the Central Excise provides that if the owner of the goods, the confiscation of which has been adjudged, exercises his option to pay fine in lieu of confiscation, he may be required to pay such storage charges as may be determined by the adjudicating officer. Disposal of goods confiscated: Provisions for disposal of goods confiscated are contained in rule 29 of the Central Excise Rules. Goods of which confiscation has been adjudged and in respect of which the option of 36 paying a fine in lieu of confiscation has not been exercised, shall be sold, destroyed or otherwise disposed of in such manner as the Commissioner may direct. If the offence relating ....
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.... is imposable under Section 114A of Customs Act. As also penalties are imposable under sections 30 upon the person-in-charge of a vessel; or an aircraft; or a vehicle carrying imported goods or any other person as may be specified for delay or failure to deliver to the proper officer an import manifest or import report upon the arrival of the vessel or the aircraft or a vehicle; under section 112 for improper importation of goods; under Section 114 for attempt to export goods improperly; under Section 114AA for use of false and incorrect material; under Section 116 for not accounting for goods; under Section 117 for contravention, etc., not expressly mentioned. Confiscation is provided under Customs Act, 1962 in terms of sections: 111. Confiscation of improperly imported goods, etc. 113. Confiscation of goods attempted to be improperly exported, etc. 115. Confiscation of conveyances. 118. Confiscation of packages and their contents. 119. Confiscation of goods used for concealing smuggled goods. 120. Confiscation of smuggled goods notwithstanding any change in form, etc. 121. Confiscation of sale-proceeds of smuggled goods. Mens rea is not essential condition for imposin....
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....e Central Excise Rules. Goods of which confiscation has been adjudged and in respect of which the option of paying a fine in lieu of confiscation has not been exercised, shall be sold, destroyed or otherwise disposed of in such manner as the Commissioner may direct. If the offence relating to any seized goods is proved, the Adjudicating Authority should necessarily adjudicate the case for ordering confiscation. (reference Board's Circular No.5/89, dated 19.1.1989 (From F.No.208/2/89-Cx.6) should be followed in Customs cases as well. In adjudication proceedings, reliance cannot be placed on section 138A of Customs Act. Presumption of culpable mental state. - (1) In any prosecution for an offence under this Act which requires a culpable mental state on the part of the accused, the court shall presume the existence of such mental state but it shall be a defence for the accused to prove the fact that he had no such mental state with respect to the act charged as an offence in that prosecution. 39 Explanation. - In this section, "culpable mental state" includes intention, motive, knowledge of a fact and belief in, or reason to believe, a fact. (2) For the purposes o....
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....fied records, penalty shall be 50% of the tax amount. The latter penalty (only) shall be further reduced to 25% if the tax dues are paid within a period of one month together with interest and reduced penalty. For assessees with turnover upto Rs.60 lakh the period of one month shall be increased to ninety days. Section 80 is being amended by substituting section 78 with the words "proviso to section 78" and thus the power to waive penalty shall be available only in cases where the information is captured properly in the specified records. The revised position relating to penalties and their mitigation or waiver is summed up in the following table (portion in italics being the changes): Situation Position in Penalty & Provision Mitigation Complete records Waiver No fraud, Captured 1% of tax or Rs Totally mitigated if tax and On showing suppression zoo per day upto interest paid before issue of reasonable etc. 50% of tax notice: Section 73(3) cause under amount: Sec 76 section 80 41 Cases of Captured 50% of tax (a)1%per month; max of - - fraud, true & amount: Proviso 25% if all dues paid before suppression complete to Section 78 notice: Sec 73(....
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.... by a Central Excise Officer, may, pending the orders of the adjudicating Central Excise Officer, be released to the owner on taking a bond from him in the proper Form, with such security as the Commissioner may require. These provisions are available in terms of para 3.2 of Part I of Chapter 17 of Central Excise Manual (CBEC - Supplementary Instructions) 2010-11. As prescribed in the said "rule, seized goods, irrespective of the value thereof, can, pending adjudication" be released to the owner, if he so desires on taking a bond from him in Form B-11 (Sec.) with sufficient security. As a working rule, the option to take delivery of the seized goods before adjudication or to leave the goods in the custody of the Department till adjudication, should be left to the owner. If, however, the officer competent to grant release under erstwhile Rule 206(3) thinks that by releasing the goods provisionally, some important evidence material and relevant to the case would be lost, such officer may, in his discretion, refuse to grant such release. This procedure should be made known to the party concerned every time a seizure is made and the two alternative modes of dealing with the seized good....
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....d from him in the proper form with such security and conditions as the Commissioner of Customs may require. The Budget 2011 proposes amendment to Section 110A so as to empower the adjudicating authority to allow release of seized goods instead of Commissioner of Customs. 44 Where offending goods are released provisionally against Bond, the goods should be held to be liable to confiscation and appropriate redemption fine should be imposed and ordered to be appropriated in terms of the Bond filed. The Supreme Court have confirmed this view in the case of M/s Weston Components [2000(115) ELT 278] Redemption Fine SECTION 34 of Central Excise Act, 1944 provides for giving an option to pay redemption fine in lieu of confiscation whenever confiscation is adjudged under this Act or the rules made thereunder, such fine as the adjudicating authority thinks fit. Section 125 of Customs Act, 1962 provides for option to pay fine in lieu of confiscation in Customs case. Where any fine in lieu of confiscation of goods is imposed under sub-section (1), the owner of such goods or the person referred to in sub-section (1), shall, in addition, be liable to any duty and charges payabl....
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....rage and other charges as may be incurred in respect of the goods. (iii) In order that, in any appeal or revision application which the owner may have filed and which has not already been decided prior to the disposal of the goods, an order may not be made by the appellate or revisional authority in terms setting aside the order of confiscation, adjudicating officer must promptly inform the appellate authority that the goods have been sold already, so that an appropriate order can be made by such authority, having regard to the facts of the case. Such order, for instance, may require that net sale proceeds of the goods may be paid to the owner. Release of confiscated goods beyond the time limit prescribed in the order-in- original/order-in- appeal, clarification regarding :- In cases where the party (ies) has/have gone in appeal, the time limit specified for redeeming the goods in the order-in-original will have no relevance as the same is under challenge, before the higher authority. Where the party has not gone in appeal, as the statutory limit for filing the appeal is three months, the party is eligible to get the goods redeemed within 'the appeal period, irrespectiv....
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....ly under the provisions of Section 11A and 11AB. (iii) On the excess amount collected in excess of the amount of duty assessed and determined and paid on any excisable goods, from the buyer of the goods under Section 11DD. Interest is also payable by the Department in delayed refund cases under the provisions of Section 11BB. As per Section 11AA inserted with effect from 26.5.1995 by the Finance Act, 1995, interest is chargeable on delayed payment of duty after three months from the date of determination of duty liability by the Central Excise officer under sub-section (2) of Section 11A. Section 11AB was inserted by the Finance Act, 1996 with effect from 28.9.1996 as per which interest will be charged from the first date of the month following the month in those cases where the duty was not paid on account of fraud suppression etc. [Sec. 11AB(1)]. As a result of the insertion of Section 11AB by the Finance Act, 1996 for the period from 28.9.1996 to 11.5.2001 {substitution of Section 11AB(1) and 11AB(2) vide Finance Bill, 2001 interest is chargeable as follows: (a) In the normal case, interest will be charged for the period of delay after three months from the dat....
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....@ 2% per month for the period starting with the first day after due date till the actual payment. CENVAT Credit taken or utilized wrongly shall also be recovered with interest as per the provisions of Section 11A and Section 11AB. (Rule 14 of CENVAT Credit Rules). Under Section 11DD, Interest is to be charged for the excess amount collected in excess of the amount of duty assessed and determined and paid on any excisable goods, from the buyer of the goods, from the first day of the month succeeding the month in which the amount ought to have been paid. 49 There may not be need for any explicit mention of the interest liability in the show- cause notice since the legal provisions are explicit. However, the same may be done as a matter of abundant precaution. Likewise, the adjudicating officer may incorporate the fact about the interest liability in the order confirming the demand. No interest is chargeable or payable in respect of fines and penalties. Amount deposited under Section 35F as a condition precedent to hearing an appeal does not bear the character of Duty but has character only of Security Deposit. Such Deposit not governed by provisions of Section 11B r....
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....eputy Commissioner of Central Excise before the expiry of one year from the relevant date. The limitation of one year shall not apply where any duty has been paid under protest. (2) If, on receipt of any such application, the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise is satisfied that the whole or any part of the duty of excise paid by the applicant is refundable, he may make an order accordingly and refund be paid to the applicant if the incidence of duty has not been passed on by the persons concerned to any other person and in any other case the amount so determined shall be credited to the Consumer Welfare Fund established in terms of section 12C of the Central Excise Act, 1944: (3) The Section 12B provides for presumption that the incidence of duty has been passed on to the buyer. Thus, unless the contrary is proved by the applicant, it 51 should be deemed that the full incidence of duty has been passed on to the buyer of such goods. Interest on delayed refunds. The Section 11BB provides that if any duty ordered to be refunded under sub- section (2) of section 11B to any applicant is not refunded within three months fro....
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....e case may be, by the court shall be deemed to be an order passed under that sub-section for the purposes of this section. Grant of personal hearing before a refund claim is rejected/modified. Where under Section 11B of the Central Excises Act, 1944 a refund claim (including a rebate claim) is sought to be rejected or modified, it is necessary for the Asstt./Deputy Commissioner to comply with the principles of natural justice. Hence, all cases of rejection or modification of refund claims should be decided after issue of show cause notice and/or grant of personal hearing. The adjudication order passed in such cases should he a speaking order clearly stating the grounds on which the refund claims has been rejected or modified. The above instructions are to be followed in Service Tax and Customs cases as well. Refund under Section 11C-Instructions regarding [F.No.210/8/86-CX.6, 24.2.1988 (Cir.No.13/88) referred] A case came to the notice of the Board wherein a notification under Section 11C was issued, not to collect duty for certain period in accordance with the general practice of non levy of duty on an excisable product. However some assessees had paid the duty on t....
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....efund is not admissible if demand, though legally due but time-barred, was paid by assesses without coercion (voluntary deposits) The Hon'ble Tribunal in a three members Special Bench decision in the case of M/s India Cements Ltd. vs Collector of Central Excise, Madras [1984 (18) E.L.T. 499 (Tribunal) referred] observed that the refund is not admissible if demand, though legally due but time-barred, was paid by assesses without coercion - Rule 10 of the Central Excise Rule. The excerpts are given below: "The demand, therefore, was quite correct to the extent that the money demanded was due to the Central Excise revenue. The only flaw in the demand was that it was issued outside time. In normal circumstances, if the demand is barred by time, it is a dead demand and no more need be said about it and the demand issuing office cannot enforce such a demand. However, this demand was paid by factory, although it says it paid it 'under protest'. Having paid the demand, therefore, and seeing that the money rightfully belonged to the department, we cannot say that the department had no claim to it and should refund it. As we have said, it is money that was due and can be lawfully recei....
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....d Customs Officers the power to adjudge penalties and confiscations for contravention of certain rules/sections. In the discharge of this function, these officers are not required to adopt the procedure prescribed for the trial of a criminal offence or any procedure laid down by law. Such officers, it has been ruled, are purely administrative and executive authorities and their function is not a criminal prosecution (vide Supreme Court Judgment in Maqbool Hussain Vs. Union of India). The rules and provisions in question are consequently only quasi-criminal prohibitions enacted in the interest of revenue and defined mostly in absolute terms without reference to a mental element (mens rea). The authority of the Statute is, therefore, paramount and mens rea is not a necessary ingredient. Therefore, even if mens rea has not been established, personal penalties as prescribed in the Central Excises Act, 1944, or the rules framed thereunder or under the Customs Act or under the Finance Act, 1994 can still be imposed for any established contravention of the Central Excise Rules or the Customs Act or Finance Act, 1994. Confiscation of goods :- The expression 'shall be liable to confis....
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....nt receipt when received should be kept on the relevant file. If there is any unreasonable or undue delay in the receipt of the acknowledgement of the party, the matter should be taken up immediately with the Post Office concerned. Acknowledgement receipt of the party is an important document as it 57 shows the actual date of receipt of the adjudication order and computation of the period of appeal is to be made from this date. (2) Instructions should be issued by the Commissioner to the staff to keep a proper track of acknowledgment cards when received back from postal authorities and for placing them in the proper files on their receipt in order to have a record about the dates of actual receipt of the Adjudication Orders by the parties. For the sake of immediate identification of such acknowledgment cards, the concerned branch may stamp such acknowledgement due cards indicating Central Excise Adjudication Branch, Customs Adjudication Branch or Service Tax Adjudication Branch at the time of despatch so that the cards we received back from the postal authorities may be delivered to the branches concerned immediately on their receipt. It is felt that the practice of servin....
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....orfeiture by a Court under Section 10 of the Central Excises Act :- In a departmental confiscation the officer is bound to give an option to the offender to redeem the confiscated goods by paying a fine in lieu of confiscation but the forfeiture to government ordered by a Court is absolute and unqualified. Prosecutions: Prosecution under the Central Excises Act and imposition of penalties under the Central Excise Rules should, as far as possible, be avoided in petty cases. All important contraventions of the Act should be immediately reported through proper channel by the officer who first detects them to the Commissioner for orders. The Commissioner will institute such enquiries as may be necessary and obtain the Chief Commissioner's sanction for prosecution where necessary. Prosecution can be launched under section 9 for the offences covered under section 9(1) of the Act. As per provisions of section 9AA, prosecution may be launched against any person, Director, Manager or any other person who is responsible for conduct of business of the company/firm and is found guilty of the offences under the Act/Rules. It has been provided that prosecution may be launched in case....
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....dulent intention/mensrea is present. (b) In order to avoid prosecution in minor cases, monetary limit has been prescribed. It has been provided that prosecution may be launched in cases involving duty 60 amount of Rs. 25 lakh or more. However, prosecution can be considered in case of habitual offenders irrespective of monetory limit prescribed, if circumstances so warrant. (c) The evidence is considered sufficient to obtain the conviction. (d) Prosecution should be launched against top management when there is adequate evidence/material to show their involvement in the case. (e) Persons liable to prosecution should not normally be arrested unless their immediate arrest is necessary. Arrest should be made with the approval of the Commissioner. Cases of arrest should be reported at the earliest opportunity to the Commissioner who will consider whether the case is fit one for prosecution. (f) Decision on prosecution should be taken immediately on completion of the adjudication proceedings. In order to avoid delay, the case should be processed even when the adjudication proceedings are in progress (g) Prosecution should normally be launched immediately after adj....
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....usly. The above guidelines cannot cover all the situations. The Commissioners will have to take the decision in a case in the light of the Government's general policy indicated above. In case, where the departure is made from the above general guidelines for sanctioning prosecution or otherwise, reasons for his decision should be recorded by the Commissioner in the relevant file. The Asstt./Deputy Commissioner will appoint an officer to conduct the prosecution. But in important court cases involving complicated legal issues the Asstt./Deputy Commissioner, with the previous permission of the Commissioner, may arrange to secure the help or advice of the local public prosecutor or of any other competent lawyer. Assts./Deputy Commissioners should invariably watch closely the progress of cases during all stages and render all necessary assistance to the subordinate officers to ensure that offenders do not escape conviction through any defect in the conduct of the case. When the case has been completed the bill of the costs of legal advice should be submitted to the Commissioner for sanction. Instructions as to conduct of cases in Criminal Courts :- 62 Officers should norm....
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....dverse decision, and the opinion of the Counsel who appeared on filing such an appeal or revision. (c) In cases of urgency and where the stakes are heavy, the Commissioners should themselves discuss with the Counsel and report the gist of discussion and the advice of the Counsel to the Board/Government while seeking orders. Pendency of departmental proceedings till the Court case is over :- (1)In the absence of an order of Interim Stay by the Court, the departmental authority is not debarred from proceeding with the case, appeal or revision petitions even when it comes to know that the party has, during the pendency of the case or in appeal or revision moved the court for a writ. Difficulties would however arise if, after the writ is filed, the adjudicating officer or the appellate or the revising authority decided the case in a particular way, and, subsequently, the court comes to the opposite conclusion. The practical difficulty of the records being called for by the Court is also relevant (2) The Ministry of Law have, advised that each case should be considered separately and the authority may decide whether, even in the absence of a stay order from the court, it sho....
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....d vide Circular No. 162/73/95-CX., dated 14-12-1995 [1996 (81) ELT T9] that only following type of categories of cases can be transferred to Call Book :- (i) Cases in which the Department has gone in appeal to the appropriate authority, (ii) Cases where injunction has been issued by Supreme Court/ High Court/CEGAT, etc. (iii) Cases where audit objections are contested. (iv) Cases where the Board has specifically ordered the same to be kept pending and to be entered into the call book. 2. The matter has again been examined with reference to PAC's recommendation on Paras 2.5 and 2.6 of the C & AG Report for the year 1998-99 relating to inordinate delay for recovery of confirmed demands and non-adjudication of demands respectively contained in 39th Report. In this regard it is found that the existing instructions of the Board on the issue are not being scrupulously followed by the field formations. The pendency of call book cases continues to be very high. Therefore, the Board while reiterating its earlier instructions, has decided that the respective Chief Commissioner should monitor progress of disposal of call book cases specifically to see whether - 1. Call Book ....
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....ent so to do for the purpose of uniformity in the classification of excisable goods or with respect to levy of duties of excise on such goods, issue such orders, instructions and directions to the Central Excise Officers as it may deem fit, and such officers and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the said Board : Provided that no such orders, instructions or directions shall be issued: So as to require any Central Excise Officer to make a particular assessment or to dispose of a particular case in a particular manner; or so as to interfere with the discretion of the Commissioner of Central Excise (Appeals) in the exercise of his appellate functions. The provisions regarding instructions to Central Excise Officers under Section 37B of the Central Excise Act, 1944 apply mutatis mutandis to the cases of Service Tax in terms of Section 83 of Finance Act, 1994. Similar provisions are available under section 151A of the Customs act, 1962. Thus, the Circulars and instructions issued by the Board are binding in law on the authorities under the respective statutes, but when the Supreme C....
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....ke effect: In order to avoid unnecessary disputes and adjudication resulting from bringing into effect on a wrong date of various Notifications, Rules, Acts passed by Parliament or ordinances issued by the President it is necessary for the officers to know the date from which these Rules, Notifications etc. should take effect. (i) Acts passed by the Parliament and Ordinances issued by the President :- Unless otherwise provided for in such statutes, all acts passed by Parliament and Ordinances issued by the President come into effect on the date on which they receive the assent of the President. (ii) Rules made under the Acts such as the Central Excise Rules amendments to Rules, Notifications in the Gazette of India issued by the Govt. Under the Act or Rules :- 68 Unless the appropriate date is specified in the Notifications of Rules, all such Rules and Notifications issued under this item become effective only from the date on which they are published in the Gazette of India and not from the date on which they were signed by the appropriate authorities. (iii) Notification and supplemental Instructions such as under Rule 233 or under any other Rule of Central Ex....
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.... of goods may take the form of stopping all clearances of the owner's goods from licensed or approved premises, i.e., a factory, a warehouse, bonded store room etc. (d) Enforcement of Payment of Excise Duty (i) The principles contained in sub-paragraphs (b)(i) to (v) above should also be followed in regulating recovery of excise duty ordered to be paid. (ii) Excisable goods whether duty paid or not, belonging to the person who has been ordered to pay the duty may be detained under Rule 230 of the Central Excise Rules, 1944. The principles contained in sub-paragraph (b)(vi) above are all applicable to such cases of detention. (iii) Where the goods in respect of which the duty has been ordered to be paid are under excise control, they should be detained pending payment. It would not ordinarily be necessary to detain other goods. 70 CIRCULARS/INSTRUCTIONS REFERRED Sr. No. CIRCULARS/INSTRUCTIONS REFERRED Date Page No. 1 752/68/2003-CX 01-10-2003 8 2 865/3/2008-CX 19-02-2008 8 3 922/12/2010-CX 18-05-2010 8 4 762/78/2003-CX 11-11-2003 9 5 806/3/2005-CX 12-01-2005 9 71 6 362/78/97-CX 09-12-1997 9 7 23/2009-CUS 01-09-2009 9 8 130/12/2010-ST 2....