CONFISCATION AND PENALTY - Central Excise Practice Manual (OLD) - Central Excise

14. CONFISCATION AND PENALTY 14.1 Legal provisions relating to imposition of Penalty and confiscation: The statutory provisions relating to imposition of Penalty and confiscation are as indicated below: Section 11AC of the Act: Mandatory penalty equal to the duty not levied or paid or short paid or erroneously refunded is liable to be imposed, if the same is by reason of fraud or suppression of facts or mis-statement or contravention of the provisions of the Act /Rules with intent to evade payment of duty. However, in the event of payment of the duty and interest within 30 days of the communication of the order issued under Section 11A (2) of the Act, the penalty shall be 25% of the duty subject to the condition that he reduced penalty is also paid within the said period of 30 days. Rule 25 of the Central Excise Rules, 2002: Penalty is liable to be imposed on any producer, manufacturer, registered person of a warehouse or a registered dealer not exceeding the duty on the excisable goods in respect of which any of the specified contraventions has been committed, or Rs. 2000/-, whichever is greater. The penalty under Rule 25 is subject to the provisions of Section 11 AC of the Act. The offending goods are also liable to confiscation. The specified contraventions are as listed below: (a) Removal of excisable goods in contravention of any of the legal provisions of the Rules or the Notifications issued thereunder; or (b) Non-accountal of any excisable goods produced or manufactured or stored; or (c) Manufacture, production or storage of any excisable goods without having applied for the registration certificate required under Section 6 of the Act read with the Rule 9 of the CER; or (d) Contravention of any of the legal provisions of the Rules or the Notifications issued thereunder with intent to evade payment of duty. Rule 26 of the Central Excise Rules, 2002 : The person who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with, any excisable goods which he knows or has reason to believe are liable to confiscation under the Act or the said Rules, shall be liable to a penalty not exceeding the duty on such goods or Rs. 2000/- , whichever is greater. Rule 27 of the Central Excise Rules, 2002: A general penalty is liable to be imposed which may extend to Rs. 5000/- for contravention of the Rules and confiscation of the goods in respect of which the offence is committed. This penalty is attracted when no specific penalty is provided for under the Act or in the Rules. Rule 15 (1) of the Cenvat Credit Rules, 2004: The person who takes Cenvat credit in respect of inputs or capital goods, wrongly or without taking reasonable steps to ensure that appropriate duty on the said inputs or capital goods has been paid as indicated in the document accompanying the inputs or capital goods specified in Rule 9 of the Cenvat credit Rules, 2004 or contravenes any of the provisions of the Cenvat Credit Rules in respect of any inputs or capital goods shall be liable to a penalty not exceeding the duty on the said excisable goods or Rs.2000/- whichever is greater. The said excisable goods are also liable for confiscation. Rule 15 (2) of the Cenvat Credit Rules, 2004: If the aforesaid offence is on account of fraud or suppression of facts or misstatement or contravention of the provisions of the Act /Rules with intent to evade payment of duty, the manufacturer shall be liable to penalty equal to the duty involved in terms of the provisions of Section 11 AC of the Act. Rule 15 A of the Cenvat Credit Rules, 2004: A general penalty is liable to be imposed which may extend to Rs. 5000/- for contravention of the Rules. This penalty is attracted when no specific penalty is provided for under the Cenvat Credit Rules, 2004.