BUDGETARY CHANGES IN CENTRAL EXCISE

[Mr. M. GOVINDARAJAN]

Clause 103 to 110 of the Finance Bill (No.2), 2009 ('Bill' for short) deal with the changes in the Central Excise Act, 1994 ('Act' for short). The details of amendments brought in bill are discussed as below:

Amendment to Section 9A:

Section 9A of the Act indicates that certain offences to be non cognizable. Section 9A (1) provides that the offences under Section 9 shall be deemed to be non cognizable offences within the meaning of Criminal Procedure Code, 1898. Section 9A (2) provides that any offence may be compounded by the Chief Commissioner of Central Excise on payment of such compounding amount as may be prescribed by the person accused of the offence to the Central Government.

Clause 103 of the bill seeks to amend Section 9A of the Central Excise Act with a view to amend sub section (2) thereof by inserting the words 'and in such manner' and a proviso in sub section (2) thereof so as to provide for the manner of compounding of the offences and further to provide that certain offences and circumstances wherein the offences shall not be compoundable. 

The proviso to sub section provides that nothing contained in this sub section shall apply to-

> A person who has been allowed to compound once in respect of any of the offences under the provisions of clause (a), (b), (bb), (bbb), (bbbb) or (c) of Section 9(1);

> A person who has been accused of committing an offence under this Act which is also an offence under the Narcotic Drugs and Psychotropic Substances Act, 1985;

> A person who has been allowed to compound in respect of any offence under this Chapter for goods of value exceeding rupees one crore

For the purpose of this article the offences under Section 9(1) as detailed above are furnished below:

> Section 9(a) - contravenes any of the provision of Section 8 (Restrictions on possession of excisable goods);

> Section 9(b) - evades the payment of duty;

> Section 9(bb) - removes any excisable goods in contravention of any of the provisions of this Act or any rules made there under or in any way concerns himself with such removal;

> Section 9(bbb) - acquires possession of, or in any way concerns himself in transporting, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with any excisable goods which he knows or has reasons to believe are liable to confiscation under this Act or any rules made there under;

> Section 9(bbbb) - contravenes any of the provisions of this Act or the rules made there under in relation to credit of any duty allowed to be utilized towards payment of excise duty on final products;

> Section 9(c) - fails to supply information which is required by rules made under the Act to supply or (unless with a reasonable belief, the burden of proving which shall be upon him that the information supplied by him is true) supplies false information;

Special Audit:

Section 14A deals with the special audit in certain cases. Section 14AA of the Act deals with the special audit in certain cases where credit of duty availed or utilized in not within the normal limits etc., For both the special audits the section provides for the nomination of Cost Accountant to have audit.  Clause 104 of the bill seeks to add Chartered Accountant for conducting audit. Clause 104 of the bill seeks to add Chartered Accountant for conducting audit. Thus Cost Accountant or Chartered Accountant may be nominated by the Chief Commissioner of Central Excise for special audit under this section.

Authority for Advance Ruling:

Clause 106 of the bill proposes to amend Section 23A of the Central Excise Act by amending the definition of 'authority' in clause (e) thereof. The Authority is to be authorized by Central Government under Section 28F(2A) of the Customs Act, 1962.

Section 28F(2) of the Customs Act provides that the Authorities shall consist the following members appointed by the Central Government, namely:-

> A Chairperson - was a retired judge of the Supreme Court;

> An officer of the Indian Customs and Central Excise services who is qualified to be a member of the Board;

> An Officer of Indian Legal Service who is, or is qualified to be an Additional Secretary to the Government of India.

Section 85 of the Bill seeks to amend Section 28F of the Customs Act with a view to provide that the Central Government may, by notification, authorize the Authority for Advance Ruling constituted under Section 245-O of the Income Tax Act to Act an Authority under the said Act with the modification that a member from Indian Customs and Central Excise Service who is qualified to be a member of the Board shall act as the member of the said authority and all the applications and the proceedings pending before the authority constituted under the Customs Act shall be transferred to such notified authority from the date of authorization. Sub section (2B) of the said section provides that the Authority constituted under sub section (1) shall remain dormant on the issuance of a notification under sub section (2A).

Appeal to High Court - Section 35G:

Clause 107 of the bill seeks to amend Section 35G of the Central Excise Act retrospectively with effect from 1st day of July, 2003 so as to make express provision empowering the High Court to condone the delay in filing appeals beyond the specified period of one hundred and eighty days, as the Supreme Court and the High Courts in earlier judgments have held that the High Courts have no power to condone the delay under the said provision. The amendment is of procedure nature hence it shall apply to all the appeals and review petitions including the application or appeal or review petition, as the case may be, pending before Supreme Court or High Court.

Application to High Court - Section 35 H:

Clause 108 of the bill seeks to amend Section 35 H of the Central Excise Act retrospectively with effect from 1st day of July, 1999 so as to make express provision empowering the High Court to condone the delay in filing of application or memorandum of cross objections beyond the relevant period as prescribed in sub sections (1) and (3), as the case may be, as the Supreme Court and the High Courts in certain judgments have held that the High Courts have no power to condone the delay under the said provision. The amendment is procedural nature hence it shall apply to all the applications, appeals and review petitions including the application or appeal or review petition, as the case may be, pending before Supreme Court or High Court.

Power of Central Government to make Rules:

Clause 109 of the bill seeks to amend Section 37 of the Central Excise Act with a view to empower the Central Government to make rules regarding the manner of compounding.

Validation of certain action taken:

Clause 110 of the bill seeks to amend notification numbers GSR 448(E), dated 1st August, 1997, GSR 503(E), dated the 30th August, 1997 and GSR 130(E), dated the 10th March, 1998 with retrospective effect i.e., from the date of issue of respective notifications, so as to provide that the Central Government had the power to notify rates of excise duty under those notification by virtue of powers conferred on it by the erstwhile Section 3A of the Central Excise Act.

Clause 110 provides as follows:

1) The notifications of the Government of India, in the Ministry of Finance (Department of Revenue) number GSR 448 (E), dated 1st August, 1997, GSR 503(E), dated 30th August, 1997 and GSR 130(E), dated the 10th March, 1998, issued under Section 3A of the Central Excise Act, shall stand amended and shall be deemed to have been amended retrospectively in the manner as specified against each of them in column (3) of the Fourth Schedule, on and from the corresponding date mentioned in Column (4) of that schedule and accordingly, notwithstanding anything contained in any judgment, decree or order of any court, tribunal or other authority, any action taken or anything done or purported to have been taken or done under the said notifications, shall be deemed to be, and to have always been, for all purposes, as validly and effectively taken or done as if the notifications as amended by this sub section had been in force at all material times;

2) Notwithstanding the omission of Section 3A of the Central Excise Act by Section 121 of the Finance Act, 2001 and the expiration of the notifications referred to in sub section (1) of the purposes of sub section (1), the Central Government shall have and shall be deemed to have the power to make the rules and issue or amend notifications under Section 3A read with section 37 of the Central Excise Act, retrospectively at all material times;

3) Any action taken or anything done or omitted to be done or purported to have been taken or done or omitted to be done under the notifications referred to in sub section (1) at any time during the period commencing on or from the 1st day of August, 1997 and ending with the day, the Finance Bill (No.2) 2009 receives the assent of the President, shall be deemed to be, and to have always been, for all purposes, as validly and effectively taken or done or omitted to be done as if the amendments made by sub section (1) had been in force at all material times and accordingly, notwithstanding anything contained in any judgment, decree or order of any court, tribunal or other authority:

> Any action taken or anything done or committed to be done, during the said period in respect of any goods under the said notifications, shall be deemed to be and shall be deemed to have been, as validly taken or done or omitted to be done as if the amendments made by sub section (1) had been in force at all material times;

> No suit or other proceedings shall be maintained or continued in any court, tribunal or other authority for any action taken or anything done or omitted to be done, in respect of any goods under the said notifications, and no enforcement shall be made by any court, of any decree or order relating to such action taken or anything done or omitted to be done as if the amendments made by sub section (1) had been in force at all material times;

> Recovery shall be made of such amounts of duty or interest or penalty or fine or other charges which have not been collected or, as the case may be, which have been refunded, as if the amendments made by sub section (1) had been in force at all material times;

For the removal of doubts it is hereby declared that no act or omission on the part of any person shall be punishable as an offence which would not have been so punishable if this section had not come into force.