Issuance of SCN against EOUs - Central Excise Practice Manual (OLD) - Central Excise

Issuance of SCN against EOUs Vide Circular No. 21/95-Cus. dated 10.3.1995 , the CBEC has clarified to its field formations that prompt action should be taken for issue of SCNs against units indulging in gross violations of law like illicit removal/non-accountal/disappearance of goods and the like. However, on issues like the non-fulfillment of export obligations action has to be initiated in consultation with the DC or the Commerce Ministry. Further, vide Instruction F. No. 307/5/97-FTT, dated 6.8.1997, the CBEC clarified that the EOUs which failed to achieve export obligations/value addition in/after 5 years of inception, duty may be demanded without waiting for any reference to the Development Commissioner. But in matters involving interpretations of statutory provisions or the policy provisions or the scope of notifications, the issues may be referred to the Board demi-officially, (giving the details properly and enclosing copies of documents on which doubts have arisen) for detailed examination in the Board's Office. In such cases, show cause notices should be issued only after the issues are examined and the legal position settled. This would avoid situations wherein the allegations in the notices might be found unsustainable in terms of EXIM Policy/Customs Law and may have to be dropped by the department itself. The CBEC, now vide Circular No. 12/2008-Customs has clarified that after the block of 5 years, final decision would be taken by the Development Commissioner with respect to fulfillment of export obligation as far as possible within 6 months but positively within one year. An amendment to this effect has also been made in para 3(ii) of part (a) of Appendix 14-I-G to HOP . Hence as per the CBEC Circular, duty, if any, can be demanded in the event of default in achieving NFE from a unit after a block of 5 years in accordance with the conclusion arrived at by the DC/Director STPI within a period of six months after the expiry of 5 years block period. In the cases of non-receipt of final decision from the DC/Director STPI within a period of six months, the matter may be taken up immediately by the jurisdictional Central Excise authorities with these authorities so that a decision regarding status of achievement of positive NFE is not delayed beyond one year and action could be initiated for recovery of duty from the defaulting units without any further delay. This implies that demand of duty for non-fulfillment of NFE rests on the decision of DC.