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Comments/suggestions invited on Draft Adjudication Manual
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....e schedule for expeditious adjudication of offences and seizure cases26 20.Issue of show cause notice on receipt of audit objections from cera and adjudication thereof28 21.Speaking order29 22.Form of adjudication order in Central Excise cases29 23.Corrigendum31 24.Penalties and Confiscation33 25.Mandatory penalty under section 11AC of Central Excise Act, 194433 26Disposal of goods confiscated36 27.Penalties and confiscation in customs37 28.Mandatory penalty under section 114 A of Customs Act, 196238 29.Presumption of culpable mental state39 30.Penalties in the case of service tax39 31.Provisional release of things seized44 32.Redemption fine46 33.Release of confiscated goods beyond the time limit prescribed in the order-in-original/ordering appeal clarification regarding46 34.Interest46 35.Refunds50 36.Refund of duty paid in case of time- barred demand54 37.Determination of mens rea in departmental adjudications55 38.Confiscation of goods56 39.Whether warnings are punishments under section 33 of the Central Excises Act, 194456 40.Passing of conditional orders in adjudication and appeals56 41.Despatch of adjudication order by registered post acknowledgement due57 42.Despatch of or....
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....d 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 bias. It is important to know and understand the facts of the case, processing them properly and to apply correctly the sections and rules of Central Excise law or Notifications that may be relevant to the facts of each case. Care should be 4 taken to ensure that wrong sections of acts are not applied to a case which attracts some other provisions of law....
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.... 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 appoint such persons as it thinks fit to be officers of customs. Also, the Board authorizes a Chief Commissioner of Customs or a Commissioner of Customs or a Joint or Assistant Commissioner of Customs or Deputy Commissioner of Customs to appoint officers of customs below the rank of Assistant Commissioner of Customs. Several notifications have been issued, particularly with respect t....
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.... 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 provision, under Rule 5A of Central Excise Rules, 2002. MONETARY LIMITS FOR THE PURPOSE OF ADJUDICATION Adjudication of the case where anything is liable to confiscation or any person is liable to penalty has to be done by Officers specified in section 33 of the Central Excise Act, 1944. Central Excise Officers have the power to determine whether duty of excise has not be levied or short paid or not paid, erroneously refunded unde....
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....rified 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 involved, no doubt, may be criterion for imposing a heavier penalty and if the proper amount of the penalty is beyond the competence of the authority concerned, the officer should refer the case to his superior with a forwarding note to that effect. The powers of adjudication under Customs Act, 1962 9 Similarly the Board vide Circular No. 23/2009-Cus Dated 1/9/2009 has prescribed the Powers of adjudication of the officers of Customs by reviewing the mo....
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....Superintendent of Central ExciseNot 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 ExciseNot exceeding Rs. five lakhs (except cases where Superintendents are empowered to adjudicate.) (3)Joint Commissioner of Central ExciseAbove Rs. five lakhs but not exceeding Rs. fifty lakhs (4)Additional Commissioner of Central ExciseAbove Rs. twenty lakhs but not exceeding Rs. fifty lakhs (5)Commissioner of Central ExciseWithout limit. (F. No. 137/68/2010 - CX.4) Further vide Circular No. 130/12/2010-ST Dated 20/9/2010 (F. No. 137/68/2010 - CX. 4) the instructions in respect of Powers of adjudication of Central Excise Officers in Service Tax cases specifying uniform monetary limits for adjudication of cases under section 73 and section 83 A of the Finance Act, 1994. The adjudication powers in Service Tax cases have been delegated upto the level of Assistant Commissioners and 11 Superintendents as per the monetary limits for adjudication of cases revised vide Notification No. 48/2010-Service Tax dated 8th Se....
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....ction, 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 nullity, it should be taken as not to exist at all. When the fact of such an order having been passed is brought to light, the records should be corrected, the order deleted from the record and the party affected informed accordingly. (Board's F.No.18/18/65-CXIV dt. 29.4.65) Principles of Natural Justice: The classic exposition of Sir Edward Coke of natural justice requires to "vocate, interrogate and adjudicate". Adjudication proceedings shall be conducted by observing principles of natural justice. The principles of natural justice must be....
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....de 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 for the purpose should be adequate so as to enable him to make his representation. In the absence of a notice of the kind and such reasonable opportunity, the order passed becomes wholly vitiated. Thus, it is but essential that a party should be put on notice of the case before any adverse order is passed against him. This is one of the most important principles of natural justice. Secondly, the orders so 14 passed by the authorities should give reason for arriving at any conclusion showing proper application of mind. Violation of either of them could ....
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....ion 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 tribunals exercising quasi-judicial function will be able to justify their existence and carry credibility with the people by inspiring confidence in the adjudicatory process. The rule requiring reasons to be given in support of an order is, like the principle of audi alteram partem, a basic principle of natural justice which must inform every quasi-judicial process and this rule must be observed in its proper spirit and mere pretence of compliance with it would not satisfy the requirement of law. ... " It is important to bear in mind that when reasons are announced an....
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....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 provisions of section 35Q of the Central Excise Act, 1944 with regards to appearance of authorized representatives apply mutatis mutandis to cases of Service Tax. Similar provisions have also been made in respect of cases of Customs under section 28(2) of the Customs Act, 1962 which reads as follows: "The proper officer, after considering the representation, if any, made by the person on whom notice is served under sub-section (1), shall determine the amount of duty or interest due from such person (not being in excess of the amount specified in the notice) and thereupon such person ....
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.... 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 on the facts of the case. Hence, the adjudicating authority shall take a decision on requests for cross-examination is a question which may largely depend on the facts of the case and circumstances of each case. Cross examination of witnesses, whose statements are relied upon in the proceedings, shall be allowed if there is any request in this regard from the defendant [2002 (143) E.L.T. 21 (S.C.), 2002 (146) E.L.T. 248 (S.C.), 2000 (122) E.L.T. 641 (S.C.)]. The Allahabad High Court in [1993 (68) E.L.T. 548 (All)] has held that "Moreover, the right to cross-examination is not an absolute right. The question whether ....
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.... 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 Central Excise Act, 1944 apply mutatis mutandis to cases of Service Tax in terms of section 83 of Finance Act, 1994. Relevancy of Statement recorded under Customs Act, 1962 The provisions of section 138B of Customs Act, 1962 in customs cases are para- material to provisions of 9D of Central Excise Act, 1944 and are to be interpreted and followed accordingly. Relevancy of evidences other than statements such as documents / microfilms/ fax The statutory provisions in this regard are provided under sections 36A and 36B of the Central Excise Act, 1944. SECTION 36A. Presumption as to documents in certain cases. 20 Where any document is produced by any person....
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....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 to affect the production of the document or the accuracy of the contents; and (d) the information contained in the statement reproduced or is derived from information supplied to the computer in the ordinary course of the said activities. (3) Where over any period, the function of storing or processing information for the purposes of any activities regularly carried on over that period as mentioned in clause (a) of sub-section (2) was regularly performed by computers, whether - (a) by a combination of computers operating over that period; or (b) by different computers operating in succession over that period; or (c) by different combinations of computers operating in succession over that peri....
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....ses 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 cases are provided under sections 138C and 139 of the Customs Act, 1962 which are para-materia to provisions of 36A and 36B of Central Excise Act, 1944 and are to be interpreted and followed accordingly. Absence of quantification of demand in the SCN: It is desirable that the demand is quantified in the Show Cause Notice (SCN), however, if due to some genuine grounds or to avoid time limit, it is not possible to quantify the short levy at the time of issue of SCN, the SCN would not be considered as invalid. The amount could be quantified and informed to the noticees before adjudication. In this regard the Hon'ble tribunal's Larger Bench judgment in the case of BIHARI SILK & RAYON PROCESSING MILLS (P) LTD. Vs COLLR. OF C. EX., BARODA [20....
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....), 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 the show cause notice, it could not be a valid ground for quashing the notice, because it is open to the petitioner to seek further particulars, if any, that may be necessary for it to show cause if the same is deficient. The assessee had contended before the High Court that the necessary particulars to enable them to show cause have not been stated in the show cause notice. The High Court held that this cannot be a ground for quashing the notice. 24 23. It is also seen that this Tribunal has been consistently taking a view that the contention that the show cause notice did not mention the amounts and hence the show cause notice was bad in law, was a untenable contention. In this connection, reference may be made to the following decisions - (1) Tinp....
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.... 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 adjudication. If the goods deteriorate by lapse of time, not only the party concerned but the Government also stands to suffer if the party does not redeem them. Officers should, therefore, see that all offence cases, especially those in which any goods have been seized or detained, are decided with utmost expedition. Time Schedule for expeditious adjudication of offences and seizure cases :- (i) In order to effect expeditious disposal of the Central Excise offences and demands the sub-section (2A) of section 11A of Central Excise Act, 1944 provides that in case any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the pro....
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.... 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 expiry of the period fixed for redemption of goods, which has been provided under the Central Excise Rules, 2002: RULE 29.Disposal of confiscated goods. - (a) Confiscated goods 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. (b) Supervisory Officers like Assistant Commissioners, Deputy Commissioners and Commissioners should keep a special watch during their inspections to see how closely the time-table has been maintained. These officers should also make detailed scrutiny of the cases which are being long delayed in order to give suitable directions to the subordinate officers for dealing with the cases mere expeditiously. (c) The procedure contained in this paragrap....
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....dicated 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. SPEAKING ORDER The adjudication order must be a speaking order giving clear findings of the adjudicating authority and he shall discuss each point raised by the defense and shall give cogent reasoning in case of rebuttal of such points. The duty demanded and confirmed shall be quantified correctly and the order portion must contain the correct provisions of law under which duty is confirmed and penalty is imposed. Adjudication orders shall be issued under the signature of the adjudicating authority. If confiscation is adjudged during adjudication proceedings, an option shall be given to the owner of the goods to redeem the goods on payment of a fine in lieu of confiscation. In this regard the judgment of the Apex Court in the case of Shukla & Brothers [2010 (254) ELT 6 (SC)] cited hereinabove is notable. Form of adjudication order in Central Excise Cases :- ....
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....nfiscation 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 option for the redemption of the goods by the owner on payment of fine in lieu of confiscation has been given and such goods are also ajudged to be liable to pay the Central Excise duty, the demand for such duty should not be made a part of the adjudication order i.e., such demand should not be made a part of the order of confiscation itself. In such cases a separate endorsement on the following lines may be made in the forwarding memo: 'The goods are dutiable and proper duty will have to be paid before they are cleared." Officers should, however, take care that the need of insisting upon recovery of duty on the goods concerned before their clearance will not arise in those cases where the facility for warehousing the goods, confiscated and redeemed, is allowed. Above instructions should be followed in respect of Customs cases as well. It may however be noted that normally goods seized in ....
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....stry 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 for review may mooted to appropriate authority instead of taking recourse to corrigendum. Law Ministry's Opinion Ministry of Law, Justice & C.A. Department of Legal Affairs The referring Department has sought our advice whether the corrigendum issued by the Commissioner of Customs, dated 12.8.99 to its earlier order dated 16.10.98 is legally valid and tenable. 2. The Commissioner of Customs, vide his order dated 16.10.98 adjudicated the matter and passed the orders as can be seen at pages 23-24 of his order placed in the file. Subsequently, almost after 10 months, he has issued a corrigendum wherein the rate of duty and penalty indicated in the earlier order were substituted. Now, the question for consideration us whether this is a valid order. 32 3. Admittedly, Commissioner of Customs is not a court and he exercise only a limited quasi-judicial function. In a number of cases, it has been held that the order of cu....
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....fore, 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, rule 25, rule 26 and rule 27 of Central Excise Rules, 2002 and rule 15 of CENVAT Credit Rules, 2004. Confiscation is provided under rule 25 and rule 27 of Central Excise Rules, 2002 and rule 33 15 of CENVAT Credit Rules, 2004. Rule 25 of the Central Excise Rules, 2002 provides for confiscation of goods under specified circumstances. In all other circumstances not specified in Central Excise Act, 1944 or Rules made thereunder, the confiscation should be in terms of Section 12 of Central Excise Act, 1944 read with Notification No.68/63 dated 4.5.1963 applying provisions of Customs Act, 1962. There is no specific provision in the Central Excise Act, 1944 when read with earlier Central Excise Rules, 1944 for confiscation. Section 12 of Central Excise Act, 1944 read with Notification No.68/63 dated 4.5.1963 as amended provides for adopting certain provisions relating to confiscation under the Customs Act, 1962 in respect of Central Excise.....
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....thin 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 or a registered dealer not exceeding the duty on the excisable goods in respect of which any of the specified contravention have been committed, or rupees ten thousand, whichever is greater. The penalty is subject to the provisions of Section 11AC of the Central Excise Act, 1944. The offending goods are also liable to confiscation. The specified contraventions are: (a) Removal of any excisable goods in contravention of any of the provisions of the said rules or the notifications issued under the said rules; or (b) Non-accountal of any excisable goods produced or manufactured or stored; or (c) Manufacture, production or storage of any excisable goods without having applied for the registration certificate required under Section 6 of the Central Excise Act; or (d) Contravention of any of the provisions of the said rules or the notifications issued under the said rules with intent to evade payment of duty. (iii) Under rule 26 of the Central Excise Rules it ....
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....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 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). CIRCULAR No. 5/1989 DT 19.01.1989 (F.No. 208/2/89-Cx.6) Confiscation of seized goods A case has come to the notice of the Board where a Collector while adjudicating a case though held that the seized goods were liable to confiscation, but did not pass any order in regard to confiscation of seized goods because such seized goods were destroyed in fire. At the time of destruction in fire, the seized goods were lying deposited in a Government Warehouse. Since the seized goods had not been ordered to be confiscated by the Collector, the title/ownership of the seized goods continued to vest with the assessee from whom the seizure was affected. Now the assessee has come up with a request for compensation in respect of the seized goods destroyed in the fire. The claim for compensation is being exam....
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....cation of smuggled goods notwithstanding any change in form, etc. 121. Confiscation of sale-proceeds of smuggled goods. Mens rea is not essential condition for imposing penalty on the importer under the Customs Act, 1962 has been confirmed. The Supreme Court in the case of UOI vs Z.B. Nagarkar [112 ELT 772(SC)] has observed that once an offence is proved, the imposition of penalty is a mandatory requirement and, as such, non imposition of penalty may not be legally proper. Mandatory Penalty under Section 114A of Customs Act, 1962 Section 114A prescribes a mandatory penalty equal to the duty not levied or paid or has been short levied, short paid or erroneously refunded by reason of fraud, collusion or any willful mis-statement, suppression of facts or contravention or any of the provisions of the act or the rules made there-under with intent to evade payment of duty. Under Section 114A penalty is imposable for short-levy or non-levy of duty in certain cases, where the duty has not been levied or has been short-levied or the interest has not been charged or paid or has been part paid or the duty or interest has been erroneously refunded by reason 38 of collusion or any wilful m....
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...."culpable mental state" includes intention, motive, knowledge of a fact and belief in, or reason to believe, a fact. (2) For the purposes of this section, a fact is said to be proved only when the court believes it to exist beyond reasonable doubt and not merely when its existence is established by a preponderance of probability. Powers under this Section is available only to a court of law in prosecution proceedings. However, mens rea is not a pre-requisite to impose penalty under Customs, Central Excise and Service Tax law. Penalties in the case of Service Tax Section70, 76, 77, and 78 of Finance Act, 1994 provide for penalties in cases of Service Tax. The Budget 2011 proposes legislative changes to the Finance Act, 1994 relating to penalties in cases of Service Tax, which are as follows: The maximum penalty for delay in filing of return under section 70 is proposed to be increased from Rs.2,000/- to Rs.20,000/ -. However, the existing rate of penalty is being retained under rule 7C of the Service Tax Rules, 1994. The maximum penalty is presently reached after a delay of 40 days. The new limit will impact only those who delay filing of return for longer durations. The prov....
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....paid before suppressioncompleteto Section 78notice: Sec 73(4A); etc.position in(b) 25% of tax if all dues recordspaid within 3o days (9o days for small assesses): Provisos to Section 78 Not soEqual amount:No mitigation at allNot possible capturedSection 78 Provisions relating to prosecution are proposed to be re-introduced and shall apply in the following situations: (i) Provision of service without issue of invoice; (ii) Availment and utilization of Cenvat credit without actual receipt of inputs or input services; (iii) Maintaining false books of accounts or failure to supply any information or submitting false information; (iv) Non-payment of amount collected as service tax for a period of more than six months. However, there shall be no power of arrest and the prosecution can be launched only with the approval of Chief Commissioner. Competent authority for Adjudication of an offence committed in one Commissionerate but Seizure of Goods made in another Commissionerate. (i) If excisable goods are dispatched from one Commissionerate to another and it is discovered at the place of destination that the goods were dispatched by the consignor in 42 contravention of certain pr....
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....should be specifically brought to the notice of the owner, Soon after the seizure, by the seizing authority, a practical difficulty 43 may arise when at the time of adjudication, it is felt necessary by the adjudicating authority to confiscate the goods in question, if they had already been released to the owner. The question will then arise as to how goods which have already been released and which are no longer in the custody of the Department can be formally confiscated. In order to overcome this difficulty the adjudication order may contain inter alia, the following: " that the goods are liable to be confiscated but as the goods were released provisionally to the owner, before Adjudication, the owner was asked to produce the goods in terms of the bond within .... On his failure to produce the goods interms of the bond [appropriate an amount of Rs towards duty Rs towards value, Rs ... towards penalty and Rs ...... towards other charges due on the excisable goods released. The balance amount of Rs ....... is ordered to be refunded." (ii) The power of the Commissioner to release seized goods pending adjudication on execution of bond in Form B 11 (Sec.) with suitable security u....
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....ds. Fines in lieu of confiscation- Date of disposal of confiscated goods (i) Wherever confiscation is ordered under the Central Excises Act, 1944, or the Rules made thereunder the adjudicating officer is required, under Section 34 of the Act, to give the owner of the goods an option to pay in lieu of confiscation such fine as the officer thinks fit. The period within which this option can be exercised by the owner of the goods has not been laid down in the Act or the Rules. Under Rule 28, confiscated goods vest in the Central Government, and there is no legal bar to their being disposed of, at any time, after the order of confiscation is passed, but the order of confiscation and the consequent vesting of the property in Government are subject to two qualifications, namely- (1) The order of confiscation is liable to be set aside or annulled on appeal or revision, in which event, that order would be deemed in eye of Law to have never been made, and the goods to which it should be held likewise never to have vested in Government. (2) (i) The mandatory provision of giving owner of the confiscated goods an option to pay a fine in lieu of confiscation shall be real, and not merely fo....
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....nal. In any case wherever any time/limit is fixed by the adjudication officer or appellate authority for payment of fine it is desirable to use the expression (or any extended time limit as may be fixed by me (i.e. the adjudicating or appellate authority). 46 In this regard the judgment of the High Court of Allahabad in the case of Mangaldas vs Collector 1989 (43) ELT 636 (Allh.) is notable. The Para 4 of the judgment is reproduced below: “4. The controversy raised by the petitioner is that the Collector, Central Excise has no power to fix the period of three months of taking of the confiscated gold and as the order granting time was illegal and was beyond his jurisdiction, it was open to the petitioner to deposit the amount at any point of time which he desired. This bald argument is not acceptable to us. To make an order effective, the Collector could have fixed the time as was done in the instant case. This point of time was ancillary and accidental to the main power. We find substance in the submission of the petitioner that since by the letter dated October 10,1979, the Superintendent had granted ten days time for complying with the order dated 6th April, 1967 and tha....
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....ses where the duty is not paid on account of fraud, suppression etc., the interest will be charged from the first date of the month following the month in which the duty was not paid. Retrospective application of Section 11AB of the Central Excise Act, 1944. - Regarding application of Section 11AB, Board issued clarification vide F.No.354/118/96- TRU dated 6.1.97 to the effect that it would apply even to past cases where duty under Section 11A(2) is determined on or after 28.9.96. The decision of CEGAT was confirmed by the Hon'ble High Court and Supreme Court subsequently. 48 In the light of the aforesaid decisions, Section 11AB can be invoked only in respect of clearances effected on or after 28.9.1996 irrespective of the date of passing of the adjudication order of a case. Section 11AB(1) and Section 11AB(2) have been substituted w.e.f. 11.5.2001 by the Finance Act, 2001 making it now clear that Section 11AB as amended, will apply only to cases where duty has become payable or ought to have been paid on or after 11.5.2001. Accordingly, provisions of Section 11AA will not apply to case where duty becomes payable on or after 11.5.2001. Proviso to Section 11AB(1) inserted with ....
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....erest and the rate will be fixed by the Government from time to time between the lower limit of 10% and upper limit of 36% per annum. Under Section 11BB interest is payable by the Department in delayed refund cases. Interest is payable for the period of delay after 3 months from the date of receipt of application of refund. Interest payable by the Department as delayed refunds as per Section 11BB will be not below 5% and not exceeding 30% per annum, fixed by the Government from time to time. CUSTOMS ACT, 1962 Interest is chargeable on the delayed payment of duty under the provisions of Section 28AA and 28AB. The Budget 2011 proposes legislative changes to the provisions relating to charge of interest on the delayed payment of duty. Section 28AA and 28AB are being substituted with a revised section 28AA so as to make the provisions relating to interest more coherent and clear. It is being provided that interest would be payable from the first day of the month succeeding the month in which the duty ought to have been paid or erroneously refunded. Pending enactment of the Finance Bill, 2011, notifications revising the rate of interest to 18% per annum has been issued under the ex....
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....ixed by the Central Government, by Notification in the Official Gazette, on such duty from the date immediately after the expiry of three months from the date of receipt of such application till the date of refund of such duty. The provisions for Claim for refund of duty provided under SECTION 11B, Section 11BB and 12B of the Central Excise Act, 1944 apply mutatis mutandis to the cases of Service Tax in terms of Section 83 of Finance Act, 1994. Customs Act, 1962 The Budget 2011 proposes changes to section 27 of the Customs Act, 1962. Sub- section (1) of section 27 is being substituted so as to enhance the time limit for claiming refund of duty and interest from six months to one year for all categories of importers. This would unify the provisions with regard to raising of demands and claiming of refund. 27A. Interest on delayed refunds - If any duty ordered to be refunded under sub- section (2) of section 27 to an applicant is not refunded within three months from the date of receipt of application under sub-section (1) of that section, there shall be paid to that applicant interest at such rate, not below five per cent and not exceeding thirty per cent per annum as is for the....
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....nistry who have opined that refund would not be admissible once the duty has been paid. The Board has accepted the advice of the Law Ministry. 3. Pending cases may be disposed of on the basis of these instructions. The instructions above under the Central Excise Act, 1944 apply mutatis mutandis to the cases of Service Tax in terms of Section 83 of Finance Act, 1994. Customs Act, 1962 28A. Power not to recover duties not levied or short-levied as a result of general practice. - [(l)] Notwithstanding anything contained in this Act, if the Central Government is satisfied - (a) that a practice was, or is, generally prevalent regarding levy of duty (including non- levy thereof) on any goods imported into, or exported from, India; and (b) that such goods were, or are, liable - (i) to duty, in cases where according to the said practice the duty was not, or is not being, levied, or (ii) to a higher amount of duty than was, or is being, levied, according to the said practice, then, the Central Government may, by notification in the Official Gazette, direct that the whole of the duty payable on such goods, or, as the case may be, the duty in excess of that payable on such goods, but ....
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....o order to immediate return of the money, because coercion/enforcement makes receipt of such money, even if lawful due, illegal. There were no such steps in the recovery of this money : the factory voluntarily paid it even if 'under protest'. Since the money is lawfully and justly receivable into Central Excise account it will not be correct to pass an order to Central Excise to return it. It is nowhere on record that the appellants were forced to pay this duty amount or that any coercive measures were adopted by the department to make the appellants to pay that duty amount. What is apparent is, a demand was raised by the Department for the payment of the duty amount which the appellants were to pay and in pursuance of that demand, the appellants paid that duty amount which might be barred by time. There is nothing on record to show and prove that the payment was made under protest and even if it was so, it does not make any difference. The question arises whether the appellants can now come forward with the plea that the time barred duty amount, which they had paid in pursuance to the demand notice, should be ordered to be refunded back to them? 55 The answer is no. As has bee....
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....there is no evidence of evasion of duty and there is a clear proof that duty has been paid, confiscation should not be necessary. 56 Whether warnings are punishments under Section 33 of the Central Excises Act, 1944 :- There has been a practice in some Central Excise Commissionerates to administer warnings in certain small cases of offences against Central Excise Rules and such warnings have been issued in regular adjudication forms. This is a wrong practice. Since there is no provision either in the Central Excise Act, or the Rules made thereunder regarding warning, they are not punishments within the meaning of Section 33 of the said act. To administer a warning is purely an administrative act and, therefore, is also not appealable. Warning, therefore, should not be included in a formal adjudication order under Section 33 of the said Act, but be issued in a simple memo form if administration of such a warning is at all considered to be necessary. Passing of conditional orders in adjudication and appeals :- In cases where some verification is required to be carried out by the field formations and which is likely to affect the very nature of the order, conditional orders shou....
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.... in such cases, another copy of the order should not be sent through postal authorities in order to avoid confusion as regards the date of actual receipt of the order by the party which is very much material in case an appeal is filed by the party. But, a proper receipt signed by the party should be obtained and placed in the file. Despatch of orders to Counsel or Advocate :- In cases where a valid Vakalatnama is filed and a Counsel or an Advocate appears on behalf of the party, the Counsel or the Advocate becomes the authorised representative of the party for that case. So long as the Vakalatnama remains unrevoked by the party, the proper course would be that all correspondence in that particular case should be conducted with the authorised Counsel and copy of the order meant for the party should also be sent through him. Offences punishable under the Central Excises Act 1944 not subject to departmental adjudication :- Offences against the rules made under Section 37 of the Central Excises Act, 1944 can be adjudicated upon by a competent Officer under Section 33 of the said Act. If however, an offence does not involve contravention of any of the Central Excise Rules but is oth....
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....tral Excise should process and forward the proposal to the Chief Commissioner (or the Director General of Central Excise Intelligence as the case may be) in cases which are fit for launching of prosecution. As per the instructions issued in this regard, the Chief Commissioner or DG, (CEI) has power to sanction prosecution. It is also mentioned that the decision to launch prosecution should be taken by the adjudicating authority immediately after the passing of adjudication order. (M.F. (D.R.) Letter F. No. 208/21/2007-CX. 6, dated 15-6-2007) Further, the said Letter stipulates that the guidelines regarding arrest and launching prosecution issued by the Board from time-to-time are followed scrupulously. All the cases involving duty amount of more than Rs. 25 lakhs should be examined from the point of view of launching prosecution. Further, once the prosecution is sanctioned, the complaint should be filed in court immediately. (Prosecution and arrest under Central Excise - M.F. (D.R.) Letter F. No. 208/21/2007-CX. 6, dated 15-6-2007 of Central Board of Excise & Customs, New Delhi, Subject : Instructions regarding launching of prosecution and arrest under the Central Excise Act, 1944....
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....d that the party has gone in appeal/second appeal. However, in order to ensure that the proceedings in appeal/second appeal are not unduly delayed because the case records are required for the purpose of prosecution, a parallel file containing copies of the essential documents relating to adjudication should be maintained. (i) Persons liable to prosecution arc not required to be normally arrested unless their immediate arrest is necessary. A large number of cases are detected for removal of excisable goods clandestinely or manufacture of goods without obtaining the licence and without payment of central excise duty. In such cases, the guilty knowledge/fraudulent intention is prima facie there. In order to have an immediate impact and to make evasion of duty uneconomical and creating the fear of spoiling their image in the trade and social circle, the person concerned for removing the 61 goods clandestinely or manufacturing without licence and clearing them without payment of duty should be arrested even before the issue of show cause notice. All steps should be taken to finalise the investigation and adjudication of the case expeditiously and prosecution of the guilty persons in....
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....ty in respect of which an offence has been committed, the fact should at once be reported to the Asstt./Deputy Commissioner through proper channel. No officer may disclose to persons outside the Department the name of an informant. Section 125 of the Indian Evidence Act Provides that the officer shall not be compelled to say whence he got any information as to the commission of any offence against the public revenue. Time-limit for an appeal against acquittal: The period of limitation for an appeal against acquittal is three months from the date of order appealed against, if the appeal is filed by the State. If the prosecution was upon complaint by the Department, an application has to be made to the High Court for special leave within 60 days of the date of the order of acquittal. In the circumstances, a copy of judgment in cases of acquittal should be obtained as quickly as possible and submitted to the Board not later than a month from the date of order mentioning particularly in cases of acquittal as to what further action is proposed to be taken and whether or not the same has been initiated. In case an appeal against the acquittal has to be preferred, the possible grounds ....
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....nstructed to make a preliminary objection inviting the Court's attention to the fact that the party has already filed an appeal or revision petition before the statutory quasi-judicial authority and has rushed to the Court during the pendency of such proceedings and, therefore, the Court should not decide the matter but direct the party to pursue its remedies before the appellate or revising authority. If such procedure is followed, the Court would probably be inclined to accept the suggestion and refer the party back to the appellate or revision authority. Remission of duty-Passing of appealable orders :- In all cases of losses involving remission of duty regular procedure of settlement of dispute under Section 33 of Central Excise Act, 1944 and in terms of the rules made under 64 this Act should be followed. The application of the parties should not be disposed of as a representation and a proper order-in-original should be issued to enable the Commissioner (Appeals)/Government of India to consider the application on further appeal/revision. Monitoring and Adjudication of Call Book cases The Board has issued Circular No. 719/35/2003-CX., dated 28-5-2003 (F.No. 101/2/2003- C....
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....hould continue to mention in the MTR as well as in the monthly statements of the progress achieved in "Key Result Areas"." Service of decisions, orders, summons, etc: The statutory provisions for Service of decisions, orders, summons, etc. have been provided under SECTION 37C of the Central Excise Act, 1944 whereunder (1) Any decision or order passed or any summons or notices issued under this Act or the rules made thereunder, shall be served, (a) by tendering the decision, order, summons or notice, or sending it by registered post with acknowledgment due, to the person for whom it is intended or his authorised agent, if any; (b) if the decision, order, summons or notice cannot be served in the manner provided in clause (a), by affixing a copy thereof to some conspicuous part of the factory or warehouse or other place of business or usual place of residence of the person for whom such decision, order, summons or notice, as the case may be, is intended; (c) if the decision, order, summons or notice cannot be served in the manner provided in clauses (a) and (b), by affixing a copy thereof on the notice board of the officer or authority who or which passed such decision or order....
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....y provisions. They are not binding upon the court. It is for the Court to declare what the particular provision of statute says and it is not for the Executive. Looked at from another angle, a circular which is contrary to the statutory provisions has really no existence in law{ RATAN MELTING & WIRE INDUSTRIES, 2008 (231) E.L.T. 22 (S.C.)} Whether non-observance by the Trade or Licensee of Suplementary Instructions Issued under Rule 233 of Central Excise Rules (Present Rule 31) is Punishable :- The Central Board of Excise and Customs and the Commissioners of Central Excise have been authorised by Rule 233 (Present Rule 31) of Central Excise Rules to issue written instructions providing for any supplemental matters arising out of the Central Excise Rules, 1944. Failure to conform to the instructions issued under this Rule is not a breach of any 67 substantive rule of Central Excise Rules. Non-observance of the instructions issued under this rule cannot, therefore, be penalised under Section 33 of the Central Excises Act, 1944 151A. Instructions to officers of customs. - The Board may, if it considers it necessary or expedient so to do for the purpose of uniformity in the classi....
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....ble goods may be confiscated, and a fine in lieu of confiscation may be imposed. (iii Excise duty and additional excise duty may be ordered to be paid. (b) Enforcement of payment of personal penalties: (i) Where a personal penalty has been imposed the order passed by the adjudicating authority should not specify the period within which the penalty should be paid. (ii) Steps to effect recovery of a personal penalty, by any of the means provided in section 11 of the Central Excises Act, 1944, should not be taken in any case, until the period for preferring an appeal has expired. (iii) A distinction should be made between personal penalties imposed on (a) "owners of goods" in respect of which the offence was committed (whether such goods are under detention or not) and (b) others. 69 (iv) In the case of (a) if the owner has preferred an appeal, and the appellate authority has fixed a time within which the penalty should be deposited before the appeal can be considered, payment of the penalty should be enforced by application of section 11, after the expiry of such period. (v) In all other cases, where an appeal has been preferred, steps to enforce payment by application of sec....
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....-03-199264 27162/73/95-CX.14-12-199564 NOTIFICATIONS REFERRED Sr. No.NOTIFICATIONS REFERREDDatePage No. 116/2007-ST19-04-20077 238/2001-CE (NT)26-06-20017 339/2001-CE (NT)26-06-20017 448/2010-ST08-09-201010 72 530/2005-ST10-08-200510 611/2007-CE (NT)11 769/5 J.S.R. No. 8/2218-07-195929 868/63-CE04-05-196333 915/2011-ST01-04-201150 CASE LAW REFERRED Sr. No.CASE LAW REFERREDCITATIONPage No. 1Suresh Synthetics2007 (216) ELT 662 (SC)14 2S.N. Mukherjee vs. UOI(1990) 4 SCC 59414 3Siemens Engineering and Manufacturing Co. of India Ltd. vs. UOIAIR 1976 SC 178515 73 4SANGHI TEXTILE PROCESSORS (P) LTD.1993 (65) E.L.T. 357 (S.C.)18 5HARIDAS AMARCHAND SHAH1989 (39) E.L.T. 329 (S.C.)18 6ROTEX TEXTILE MILLS1997 (95) E.L.T. 251 (Tri)18 7LAKSHMAN EXPORTS LIMITED2002 (143) E.L.T. 21 (S.C.)18 8SHALIMAR RUBBER INDUSTRIES2002 (146) E.L.T. 248 (S.C.)18 9SWADESHI POLYTEX LTD.2000 (122) E.L.T. 641 (S.C.)18 10SHYAM LAL BIRI MERCHANT1993 (68) E.L.T. 548 (All)18 11J&K Cigarettes vs. CCE2009 (242) ELT 189 (Del)19 12BIHARI SILK & RAYON PROCESSING MILLS (P) LTD. Vs COLLR. OF C. EX., BARODA2000 (121) ELT 617 (T-LB)23 13Hindustan Aluminium Corporation Ltd. (HINDALCO) vs. Supdt. of Central Excise, Mirzapu....