Adjudication/appeal proceedings in SCNs related to Audit Paras. - Central Excise - F. No. 232/127/2009-CX. 7

Government of India Ministry of Finance (Department of Revenue) Central Board of Excise Customs, New Delhi dated 13-10-2010 Subject : Adjudication/appeal proceedings in SCNs related to Audit Paras. Instances have come to the notice of the Board, where show cause notices issued pursuant to admitted audit objections have been dropped by adjudicating authorities, without having referred the matter to the Ministry for taking up with the office of the CAG. Similarly, it has been observed that in some cases where show cause notices had been issued pursuant to admitted audit objections, and confirmed by adjudicating authorities, were dropped by the Commissioner (Appeals) and such orders accepted by the Committee of Commissioners, without seeking the status of the audit objection from the Ministry. 2. Your Commissioners surely aware of the instructions regarding appropriate handling of such matters issued by the Board from time to time. In view of such well settled procedures, aforesaid instances should not have occurred. By way of re-iterating existing instructions and in order to further streamline the quasi-judicial processes relating to matters emanating from Audit Paras of the CAG, the following procedure may be noted for strict compliance. (a) Upon the commissionerate admitting an audit objection, the SCN should be issued immediately and in no case later than 30 days. (b) In cases where the Commissionerate contests the audit objection, protective SCN are still required to be issued pending decision by the office of the CAG, and they should be kept in call book till settlement of the objection by the CAG. (c) In cases where a SCN is issued pursuant to admitting an audit objection, the same should be adjudicated at the earliest. (d) During the course of adjudication proceedings and examination of facts and law, should the adjudicating authority come to the conclusion that the SCN (issued pursuant to an admitted objection) is not sustainable, instead of deciding the case immediately in favour of the assessee, the Commissioner should refer the matter to the Commissioner (PAC) seeking that the para be contested. The Commissioner (PAC) shall submit the revised recommendation of the Commissionerate to the concerned Member, for a decision in the matter. If the proposal of the Commissionerate is approved, revised comments/ATN shall be sent to the C AG. The Commissionerate shall in the meantime, transfer the case into call book pending a decision by the CAG. (e) In cases, where an adjudicating authority has confirmed a SCN, issued pursuant to an admitted audit objection, but the appellate authority sets aside the order (excepting cases where orders for de-novo proceedings are issued), before the Commissioner or the constituted committee decide to accept such an order, a self contained and well reasoned proposal should be sent to the Commissioner (PAC) recommending that a revised ATN contesting the Audit Objection be sent to the CAG. Further, as these matters are under statutory time limits, simultaneous preparation for filing of appeal should be initiated. 3. You may also advise your Commissioners to set up suitable coordination mechanisms between various branches, such as Audit, Adjudication, Legal Review, so that the above procedure is followed, without exception. 4. Immediately on receipt of this letter you will circulate it amongst your Commissioners with instruction for strict compliance of this procedure. Any deviation from this procedure will be viewed seriously. [F. No. 232/127/2009-CX. 7]