MISCELLANEOUS PROVISIONS - CBEC Manual (OLD) - Central Excise

CHAPTER 18 MISCELLANEOUS PROVISIONS PART-I REMISSION OF DUTY AND DESTRUCTION OF GOODS 1. Legal Provision 1.1 Rule 21 of the Central Excise Rules, 2002 provides for remission of duty in certain situations. 1.2 Where it is shown to the satisfaction of the Central Excise Officers specified in the Table below that goods have been lost or destroyed by natural or by unavoidable accident or are claimed by the manufacturer as unfit for consumption or for marketing, at any time before removal, he may remit the Table on such goods as to the extent specified in the corresponding entry in the said Table, subject to such conditions as may be imposed by him by order in writing The competence to supervise destruction of excisable goods claimed by the manufacturer as unfit for consumption or for marketing, at any time before removal has also been specified in column 4 of the said Table. Destruction shall be carried on only after the competent officer has passed the order for remission. TABLE Sl.No. Competent Central Excise Officer Amount of duty empowered to remit Monetary limit to supervise destruction (1) (2) (3) (4) 1. Commissioner Without limit, but normally any amount exceeding Rs. 5,000 2 Additional/Joint Commissioner Rs. 2,500 to Rs. 5,000 3 Deputy/Assistant Commissioner Rs. 1,000 to Rs. 2,500 Exceeding Rs. 20,000 4 Superintendent Below Rs.1000 Rs.5000 but not exceeding Rs. 20,000 5 Inspector None Below Ks. 5,000 1.3 The proper officer may not demand duty (remit duty) due on any excisable including tea claimed by the manufacturer as unfit for consumption or marketing provided the goods are destroyed irrecoverably .Under the supervision of the proper officer and subject to the procedure specified hereinafter. Procedure for Remission 1.4 The procedure to be followed for destruction of goods and remission of duty thereon shall be as follows: (i) A manufacturer desiring to destroy and seek remission of duty in respect of the excisable goods manufactured in his factory, in terms of Rule 21 on the grounds that the said goods have been rendered unfit for consumption or for marketing, will make an application in duplicate to the Range Officer indicating complete details of the goods and reasons for destruction, along with the proof that the goods have become unfit for consumption or for marketing such as report of chemical test or any other test, conducted by a Government recognised laboratory. (ii) The application will be quickly processed by the Range Officer. In case the Range Officer is competent to allow destruction and remission (in terms of para 1.2 above), he will proceed to take necessary action at his level. In case the matter falls within the competency of superior officer, he will forward the application along with his recommendation to the Deputy/Assistant Commissioner of the Division within 15 days of receipt. (iii) The Deputy/Assistant Commissioner will scrutinise the application and based upon the information given by the assessee, if found in order, allow destruction of goods and remission of duty, if the case relates to his competency. Otherwise, he will forward the application with his remarks to the superior authority competent to give permission for destruction and remission (Additional/Joint Commissioner or Commissioner, as the case may be) within 3 days. (iv) Where only physical verification is required, the same may be conducted by the remission granting authority (proper officer), as specified above and upon his satisfaction, destruction of goods and remission of duty may be allowed. (v) In case of any doubts, the competent authority may, for reasons to be recorded in writing, order for drawing of samples and its testing by the Central Revenue Control Laboratory or the Custom House Laboratories or any other Government recognised laboratory where the aforementioned laboratories cannot test the samples. The testing of samples will be done in the manner specified in the Basic Excise Manual as modified by the instructions issued, if any, by the Board in this regard. (vi) Ordinarily the views of the assessees that the goods are rendered unfit for consumption or marketing, should be accepted and necessary permission should be granted within a period of 21 days or earlier, if possible. Where samples are drawn, such permission should be granted within 45 days. (vii) Actual destruction of goods should be supervised by the officers according to the monetary limits specified in column (4) of the Table in para 1.2 above. The date and time for destruction should be fixed by mutual convenience of the proper officer and the assessee and it should be ensured that the same date and time are not fixed for more than one assessee. It should also be ensured that there is no inordinate delay once permission for destruction and remission is granted. (vii) In case of frequent requests for destruction of goods by an assessee, necessary enquiries into the cause thereof should be r before according permission for destruction of goods. (ix) The Proper officer personally supervising the destruction will check the quantity by physical verification i.e. by weight or by counting or using appropriate method in case of liquids, as the case may be, and the identity of goods by reference to relevant records and the application for destruction. The clearance of goods, within or outside the factory premises, shall be done on an invoice, indicating 'nil' duty. The order of the proper officer permitting destruction and remission should be quoted on the invoice. (x) As far as possible, destruction should be done inside the factory. 2. Manner of destruction 2.1The goods intended and presented before the proper officer for must be destroyed in such a manner that they become irretrievable as excisable commodity. The actual method of destruction will depend upon the goods to be destroyed. For example, matches, cotton, rayon and woolen fabrics, paper, cigar and cheroots may be destroyed by fire. Electric bulb may be destroyed by crushing into bits and scraps. Vegetable oils vegetable products may be destroyed by mixing earth or kerosene and dumping into pits. Whatever method of destruction is adopted, the officer supervising the destruction will satisfy himself that the destroyed goods cannot be marketed. If there is any doubt with regard to the suitability of any particular method of destroying any goods, the officer destroying the goods will refer the matter to his superior officer for orders. 2.2 The officer supervising the destruction must endorse under his signature the relevant records/documents such as ARE-1, invoices and other relevant factory records indicating the description and quantity of the goods destroyed in his presence specifying the time and date. 2.3 Immediately after destruction of the goods is completed, the officer destruction must also send a certificate to his immediate superior countersigned by the factory manager and the factory officer. 2.4ENVAT credit of duty paid on inputs contained in finished on which duty remission has been granted shall have to be reversed. 1k as issued revised guidelines in the light of Tribunal's decision in case of M/s Maftlal Industries Ltd. v. CCE, Ahmedabad. (2003 (154) E.L.T. 543 (T-Mumbai) (CBEC CircularNo.800/33/2004-CX. dated 1.10.2004) 2.5 Where inputs have been destroyed as such, proportionate credit of duty paid on such inputs should be reversed as the goods have not been out to use in manufacture of excisable goods. 2.6 There will be no limit on the executive powers of the Commissioner to order remission of duty in such cases. However, it has been decided that as a measure of administrative control and information, where the duty amount exceeds Rs.5 lakhs in a case, the Commissioners will send a report to the Board (in CX.-9 Section) giving sufficient details of such cases. 2.7. No remission of duty in case of theft should be allowed, since the goods are available for consumption somewhere else. PART II OVER TIME FEE 1. over time Fee 1.1 Wherever an assessee or exporter is requires the services of Central Excise Officers for supervision in accordance with of any procedure specified in this regard by rules or instructions beyond office hours or on Sundays, Saturdays or public holidays and where there is no specific posting of Officers in shifts by any Office order, he shall be required to pay Merchant Overtime at the rates specified under the Customs Act, 1961 under Customs (Fees for Rendering Services by Customs Officers) Regulations, 1998. 1.2 If a manufacturer or exporter requisitions the services of Central Excise Officers for supervision and examination of export cargo and stuffing in containers at his premises, such Officers also discharge functions of a "Customs Officers". PART III RECOVERY OF DUES 1. Recovery of dues 1.1 In the event the Government dues are not paid, the law provides for recovery thereof. For the recovery of dues action is to be taken under Section 11 of the Central Excise Act. After exhausting the option of taking action as above, if dues remain un-recovered , action is to be taken under the provisions of Section 142 of the Customs Act, 1962 which have been made applicable to like matters in Central Excise by Notification No. 68/63-Central Excise dated 4.5.1963 issued under Section 12 of the Central Excise Act, 1944. 1.2 Am amendment to section 11 has been made vide Finance (No. 2) Bill, 2004 to provide that the duty or any other sums of any kind are recoverable from the successor and all excisable goods, materials, preparations, plants, machineries, vessels, utensils, implements and articles in the custody of the person so succeeding can also be attached or sold for the purpose of recovering such duty or other sums due. 1.3 If the stay application is filed by the assessee against the Order-in- Original confirming the duty demand, no coercive action should be taken to realise the dues till the disposal of the stay application by the Commissioner of Central Excise (Appeal) or the Appellate Tribunal as the case maybe. However, this instruction is only for first stage appeals, in the cases where the appeal lies before the Appellate tribunal. The Commissioner (Appeal) shall dispose of the stay application where it is possible to do so, within one month of its filing. 1.4 A period of 3 months from the date of communication of the order in-original/ order-in appeal should be normally provided (one month for filing appeal and stay application and two more months for obtaining orders on the stay application), before taking coercive measures to recover the dues. However, application of an assessee is rejected by an appellate authority even before the lapse of the time limit of three months, recovery proceedings should be immediately thereafter. 15 In respect of cases decided by Commissioner of Central Excise Tribunal, Government of India or High Court, the assessee should be give a maximum period of one month from the date of communication of the pay up the dues before resorting to any coercive action. In case of decision Supreme Court of India, the assessee should pay the Government any, forthwith or else the recovery proceedings shall be initiated within 15 days of the communication of the order. 16 By virtue of Central Excise (Second amendment) rules, 2003 vide Central Excise Notification No. 12/2003-CE (NT) dated 1.3.2003, new sub rule (4) has been substituted under rule 8 of Central Excise Rule 2002. According to the rule (4), provisions of Section 11 of the Act shall be applicable for of the duty as assessed under rule 6 and the interest under sub rule (3) in the same manner as they are applicable for recovery of any duty or other sum payable to the Central Government. To implement these provisions following are prescribed. • The range superintendent, immediately on receipt of the ER-i (See Annexure 12 in Part 7) returns, shall identify the cases of default and record them in the register maintained by them. • Thereafter, the defaulters should be informed to pay the amount of duty defaulted along with interest forthwith by a notice to be issued immediately for compliance (See Annexure-43A in Part 7). Simultaneously they should keep the notice, to be issued to the defaulter for his default in payment of the duty, ready, initiating the proposed action. (See Annexure-43B in Part 7). In order to save time, they must use cyclostyled standard form of notice. In the event of the assessee's failure to pay the amount of duty defaulted, within the prescribed period, the proper officer should issue a notice in the above format to the defaulter in terms of sub-rule (3) of Rule 8 of the Central Excise Act, 1944 for recovery of the dues. • If the amount is not paid within 30 days from the date when the default is detected, action prescribed under second to rule 8(3) may be initiated. • The action as detailed above should invariably be completed within the period of one month from the due date of payment of the duty. In case the dues are not realized in terms of Section 11 of the Central Excise Act, 1944, within on month from the due date of payment of duty, an immediate action should be initiated by treating the clearances of goods as 'without payment of duty'. Simultaneously, action should also be initiated for recovery of the dues, in terms of section 142 of the Customs Act, 1962. PART IV RETURN OF DUTY PAID GOODS TO THE FACTORY 1. Return of duty paid goods 1.1 Rule 16 of the said Rules provides for return of any goods, on which duty has been paid at the time of removal, to the factory for being re-made. refined, re-conditioned or for any other reason. In such cases, the assessee shall state the particulars of such return in his records and shall be entitled to have CENVAT credit of the duty paid as if such goods are received as inputs und the CENVAT Credit Rules, 2002 and utilise this credit according to the said rules. Receipt of duty paid goods in the factory of manufacturer for the purpose specified in said rule may be allowed even in respect of goods not manufacture by them subject to adherence of other conditions prescribed under Rule 16. 1.2 If the goods so returned are subjected to certain process which do not amount to manufacture, the manufacturer shall pay an amount equal to the CENVAT credit taken. 1.3 In any other case (where the returned goods are subjected to process amounting to manufacture), the manufacturer shall pay duty at the rate applicable on the date of removal and on the value determined under Section 4 or Section 4A of the Act, as the case may be. The amount of duty paid shall be allowed as CENVAT credit as if it was a duty paid by the manufacturer who removes the goods. 1.4 In the event the assessee has any difficulty, the Commissioner is empowered to resolve the same and permit the entry of the goods into the factory and the availment of CENVAT credit thereon. For this the Commissioner, either on case to case basis by special order or to be applied to "particular type of case by general order, impose such conditions as may be necessary for safeguarding interest of revenue. PART V REMOVAL OF GOODS FOR JOB WORK OR OTHER PURPOSES 1. Rule l6A: 1.1 Rule 16A deals with the removal of inputs for job work for those manufacturers who are outside Cenvat scheme and hence are not able to send the inputs or partially processed inputs for job work as per rule 4(5) of CENVAT Credit Rules, 2004. Commissioner of Central Excise is empowered to prescribe conditions and safeguards for the purpose. 2. Rule 16B and 16C: 2.1 Rule 16 B deals with the situations where the semi-finished goods are required to be removed for carrying out certain manufacturing processes to the job worker or to any other registered premises. Jurisdictional Commissioner of Central Excise is also empowered to permit the manufacturer to allow these goods to be cleared form the premises of the job worker or other registered premises for clearance on payment of duty or for export without payment of duty. 2.2 Rule 16 C deals with the situations where the excisable goods manufactured to the factory are required to be removed for carrying out tests to r to any other registered premises. Jurisdictional Commissioner of Central Excise is also empowered to permit the manufacturer to allow these goods to be cleared form the such premises or other registered premises for clearance on payment of duty or for export without payment of duty. This provision is not applicable to "prototypes" which are sent out for trial or development test. PART-VI WRITE-OFF OF IRRECOVER4BLE ARREARS 1. Write off: 1.1 Powers to write off irrecoverable amounts of Central Excise duties and abandonment of irrecoverable amounts of fines and penalties imposed under custom Act, 1962, Central Excise Act, 1944 and Gold Control Act, 1968 have been specified in Board's letter F.No. 290/20/90-CX 9 dated 21st September, 1990 A gist of the said letter is as below: Name of the authority Power delegated 1. Chief Commissioner of Custom and Central Excise (a) Full powers of abandonment of irrecoverable amounts of fines and penalties imposed under Customs Act, 1962, Central Excise Act, 1944 and Gold Control Act, 1968 (b) To write of irrecoverable amounts of Customs! Central excise duties upto Rs.15 lakhs subject to a report to the next higher authority. 2. Commissioners of Customs and Central Excise (a) Full powers of abandonment of irrecoverable amounts of fines and penalties imposed under Customs Act, 1962, Central Excise Act, 1944 and Gold Control Act, 1968 (b) To write of irrecoverable amounts of Customs! Central excise duties upto Rs.1O lakhs subject to a report to the next higher authority. 3. Commissioners of Customs (a) Full powers of abandonment of irrecoverable amounts of fines and penalties imposed under Customs Act, 1962 and Gold Control Act, 1968 To write of irrecoverable amounts of Customs duties upto Rs.1O lakhs subject to a report to the next higher authority. 4. Commissioners of Central Excise (a) Full powers of abandonment of irrecoverable amounts of fines and penalties imposed under Customs Act, 1962 and Gold Control Act, 1968 (b) To write of irrecoverable amounts of Customs duties upto Rs.1O lakhs subject to a report to the next higher authority.