REMEDY AGAINST C.B.E& C CIRCULAR DATED 01.01.2013

[Mr. M. GOVINDARAJAN]

C.B.E. & C vide its circular No. 967/01/2013-CX, dated 01.01.2013 issued instructions to the department officers to proceed recovery proceedings on the confirmed demands unless the order is stayed.  In this regard the provisions of Central Excise Act, 1944, service tax are furnished as below:

CENTRAL EXCISE                     

Adjudicating Authorituy	Appellate Authority	Time limit for filing appeal	Delay condonation period
Asst.Commissioner/Dy Commissioner	Commissioner (Appeals)	Sixty days (Sec. 35 of Central Excise Act)	Further period of 30 days
Commissioner (Appeals)	CESTAT	Three months under Sec.35B(3) of the Act	No time limit
CESTAT	High Court	180 days (Sec. 35G of the Act)	No time limit

SERVICE TAX 

Adjudicating Authority	Appellate Authority	Time limit for filing appeal	Delay condonation period
Asst.Commissioner/Dy Commissioner	Commissioner (Appeals)	2 months (Sec. 84 of Finance Act, 1994 Act)	Further period of one month
Commissioner (Appeals)	CESTAT	Three months under Sec.86 of the Act	No time limit
CESTAT	High Court	180 days (Sec. 35G of the C.E. Act)	No time limit

RECOVERY PROCEDURE

The procedure to be followed for recovery of tax on the confirmed demand of tax/duty is prescribed under Section 87 of the Finance Act, 1994 and Section 11 of the Central Excise Act, 1944.

Sec.87 of the Finance Act provides that where any amount payable by a person to the credit of the Central Government under any of the provisions of this Chapter or of the rules made there under is not paid, the Central Excise Officer shall proceed to recover the amount by one or more of the modes mentioned below:—

      (a)  the Central Excise Officer may deduct or may require any other Central Excise Officer or any officer of customs to deduct the amount so payable from any money owing to such person which may be under the control of the said Central Excise Officer or any officer of customs;

      (b)     (i)  the Central Excise Officer may, by notice in writing, require any other person from whom money is due or may become due to such person, or who holds or may subsequently hold money for or on account of such person, to pay to the credit of the Central Government either forthwith upon the money becoming due or being held or at or within the time specified in the notice, not being before the money becomes due or is held, so much of the money as is sufficient to pay the amount due from such person or the whole of the money when it is equal to or less than that amount;

      (ii)  every person to whom a notice is issued under this section shall be bound to comply with such notice, and in particular, where any such notice is issued to a post office, banking company or an insurer, it shall not be necessary to produce any pass book, deposit receipt, policy or any other document for the purpose of any entry, endorsement or the like being made before payment is made, notwithstanding any rule, practice or requirement to the contrary;

     (iii)  in a case where the person to whom a notice under this section is sent, fails to make the payment in pursuance thereof to the Central Government, he shall be deemed to be an assessee in default in respect of the amount specified in the notice and all the consequences of this Chapter shall follow;

      (c)  the Central Excise Officer may, on an authorization by the Commissioner of Central Excise, in accordance with the rules made in this behalf, distrain any movable or immovable property belonging to or under the control of such person, and detain the same until the amount payable is paid; and in case, any part of the said amount payable or of the cost of the distress or keeping of the property, remains unpaid for a period of thirty days next after any such distress, may cause the said property to be sold and with the proceeds of such sale, may satisfy the amount payable and the costs including cost of sale remaining unpaid and shall render the surplus amount, if any, to such person;

      (d)  the Central Excise Officer may prepare a certificate signed by him specifying the amount due from such person and send it to the Collector of the district in which such person owns any property or resides or carries on his business and the said Collector, on receipt of such certificate, shall proceed to recover from such person the amount specified there under as if it were an arrear of land revenue.

Sec.11 of the Central Excise Act, 1944 provides that in respect of duty and any other sums of any kind payable to the Central Government under any of the provisions of this Act or of the rules made there under including the amount required to be paid to the credit of Central Government under Section 11D, the officer empowered by the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963) to levy such duty or require the payment of such sums may deduct the amount so payable from any money owing to the person from whom such sums may be recoverable or due which may be in his hands or under his disposal or control, or may recover the amount by attachment and sale of excisable goods belonging to such person; and if the amount payable is not so recovered, he may prepare a certificate signed by him specifying the amount due from the person liable to pay the same and send it to the Collector of the district in which such person resides or conducts his business and the said Collector, on receipt of such certificate, shall proceed to recover from the said person the amount specified therein as if it were an arrear of land revenue.

Provided that where the person (hereinafter referred to as predecessor) from whom the duty or any other sums of any kind, as specified in this section, is recoverable or due, transfers or otherwise disposes of his business or trade in whole or in part, or effects any change in the ownership thereof, in consequence of which he is succeeded in such business or trade by any other person, all excisable goods, materials, preparations, plants, machineries, vessels, utensils, implements and articles in the custody or possession of the person so succeeding may also be attached and sold by such officer empowered by the Central Board of Excise and Customs, after obtaining written approval from the Commissioner of Central Excise, for the purposes of recovering such duty or other sums recoverable or due from such predecessor at the time of such transfer or otherwise disposal or change.

REMEDIES

• Once the order has been passed by Adjudicating Authority/Appellate authority the assessee is to decide immediately to file appeal against the order, if he is aggrieved and to file appeal within the limitation period;
• Even though delay may be condoned there is the probability of taking action by the department for recovery proceedings since there is no stay order against the aggrieved order;
• Stay petition is also to be filed along with the appeal;
• On filing the appeal with stay petition, the department is to be informed about the filing of appeal and the stay petition;
• In respect of appeal filed before Commissioner (Appeals) the Department will not initiate recovery proceedings up to 30 days from the date of filing appeal along with stay petition. Steps are to be taken by the assessee to obtain stay order from the Commissioner (Appeals) within 30 days;
• In respect of appeal filed before CESTAT the Department will not initiate recovery proceedings up to 30 days from the date of filing appeal along with stay petition. Steps are to be taken by the assessee to obtain stay order from the CESTAT within 30 days by filing a petition to advance the hearing;
• Section 87 of the Finance Act, 1994 provides that the Departmental Officer can adjust the tax/duty due by the assessee from the amount of refund, if any, to the assessee.  The High Court, Madras in ‘Arunachala Gounder Textiles Mills (P) Limited V. Commissioner of Central Excise, Salem’ – 2012 (12) TMI 157 - MADRAS HIGH COURT held that such adjustment could not be done by the Departmental Officers unless a reasonable opportunity of hearing given to the assessee complying with the principles of Natural Justice;
• If any coercive mode is adopted by the department to recover the dues, it is better to file a writ petition before the High Court and to obtain stay order against the Department.
  • In ‘Bonfiglioli Transmission (P) Limited V. Commissioner of Central Excise’ 2013 (1) TMI 501 - MADRAS HIGH COURT the petitioners suffered two original orders dated 18.05.2011of Commissioner of Central Excise against which appeal was filed before the Tribunal which is pending before the Tribunal. The Department passed orders on 9.1.2013 demanding payment of duty and penalty based on the circular dated 01.01.2013. The petitioner contended before the High Court that because the Tribunal does not have regular sittings. The High Court directed the Tribunal to decide the stay petition on or before 01.02.2013 and directed the Department not to take coercive action till the disposal of stay petition by the Tribunal.
  • The Bombay High Court on 17.01.2013 granted ad-interim stay against coercive recovery pursuant to Circular No. 967/01/2013 – CX, Dated 1st January, 2013 issued by the Central Board of Excise and Customs.
  • The High Court, Andhra Pradesh on the file of ‘Ultra Tech Cements Limited’ ordered that there shall be an interim stay of the recovery of the amount involved, till the appellate authority disposes of the application for stay. The Court further held that it is made clear that the petitioner shall under obligation to abide by the order that may be passed by the appellate authority and the pendency of the writ petition shall not be treated as a factor to avoid the liability.