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TMI BlogOffence and Penalties under Central ExciseX X X X Extracts X X X X X X X X Extracts X X X X ..... nce): - 1. Contravening any of the provisions of section 8 of CEA , which relates to 'restriction on possession of certain goods in excess of prescribed quantity'. 2. Contravening any of the provisions of section 37(2) - Clause (iii) which relates to 'transit of excisable goods to any part of the country'. Clause (xxvii) which relates to 'registration of person/ unit'. 3. Contravening any provisions of central excise act/ rules in relation to Cenvat credit. 4. Removing or concerning himself in removing any excisable goods in contravention of CE act/ rules. 5. Acquiring possession of or otherwise dealing (includes possession, transporting, storing, keeping etc.) in goods which is liable to confiscation under CE act/ rules. 6. evading payment of duty payable under CEA 7. Failure to supply information which is required under the Act or supplying false information 8. Attempting to commit or abetting commission of an offence regarding evasion of duty or transit of goods or restriction on storage of goods or non-registration of a unit. Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity] PENALTY I. Penalty under Rule 25 of Central Excise Rules, 2002 As per Rule 25 of Central Excise Rules, 2000, following are regarded as offences: - 1. Removal of excisable goods in contravention of any of the rules and notification issued , 2. Non-accountal of any excisable goods produced or manufactured or stored, 3. Engaging in manufacture, production or storage of excisable goods without applying for registration certificate under section 6 of CEA. 4. Contravention of any provisions of Central excise rules or notifications issued under these rules with intent to evade payment of duty. For the above offences following punishments has been imposed: - Confiscation of contravening goods. Penalty upto duty payable on such contravening goods or ₹ 5000 whichever is higher. Points to be noted with respect to Rule 25 - Rule 25 is applicable only to manufacturer, producer, registered person of a warehouse or registered dealer. Notice imposing penalty must indicate the clause under which duty is payable, otherwise penalty may not be sustainable. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd. But in case of clandestinely removal of goods penalty will be imposable whether duty is paid before or after issue of notice. [If duty is paid in first two cases voluntarily i.e. before detection by department no penalty might be imposable (Sri selvakumar v. CCE2005 (188) ELT 334). Similar view in case of interest.] Penalty under section 11AC cannot be imposed unless duty payable is quantified. Provisions of section 11AC override the provisions of rule 25. III. Penalty under rule 26 of CEA (also called personal penalty) As per Rule 26 of CEA, -any 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 Rules, shall be liable to a penalty upto the duty payable on such goods or ₹ 5000, whichever is greater. -any person who issue or abate in making an excise duty invoice without delivery of the goods or in case on the basis of these invoices , person claim any duty benefits i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l penalty upto ₹ 5000 plus confiscation of goods in respect of which the offence is committed. This is attracted when no other specific penalty is provided for. CONFISCATION OF GOODS AND FINE IN LIEU OF CONFISCATION As discussed above, rule 25 of CEA provides for confiscation of goods if any of the four offences mentioned under rule 25 above are committed. As per section 12 of CEA , some of the sections of the customs act are made applicable to central excise act. In addition to the goods, following conveyances are also liable to confiscation under section 115(1) of customs Act: - Any conveyance from which goods are thrown over board or destroyed to prevent seizure by officer of customs. Conveyance which is required by customs officers to land or stop for inspection but fails to do so. Conveyance by which warehoused goods are cleared for export, but goods are unloaded without permission. Conveyance carrying imported goods which has entered India and is afterwards found missing either in part or in full, unless the master of the vessel is able to account for the loss of or deficiency in goods. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iable to confiscation. The same goods cannot be confiscated more than once under different provisions of the same act. If confiscated goods are not redeemed, no duty liability is payable. Procedure under confiscation As per section 124 of customs act, before confiscating the goods, show cause notice must be issued to the owner of the goods giving reasons and grounds for such confiscation. If notice is not issued confiscation is not sustainable. It is not necessary that notice must be served to the owner of the goods only, it can issued to any person responsible for alleged contravention. The owner of the goods shall be given an opportunity of being heard by making representation. As per rule 28 of CEA, on confiscation goods becomes property of central Government. As per rule 29 of CEA, if assessee opts not to pay fine in lieu of confiscation, the goods will be sold or destroyed or disposed off in such a manner as the commissioner may direct. As per rule 30 of CEA, if assessee opts to pay fine in lieu of confiscation, he may be asked to pay storage charges for storing such goods by the excise officer. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and penalty proceedings but he would have to pay duty, interest and compounding fee. Once the matter is compounded, neither department nor assessee can challenge the compounding order by filing appeal. Procedure for compounding of offence Application for compounding can be made either before or after the institution of prosecution by the assessee. Officers of excise and customs cannot apply for compounding. On receipt of application, the compounding authority will call for report from jurisdictional commissioner. Such report shall be sent within one month. After receipt of report, the compounding authority will either grant immunity from prosecution or reject the application. If prosecution is already pending, immunity granted is subject to acceptance by the court. If court rejects the order of compounding, prosecution will continue. On receipt of order, the applicant shall pay the compounding amount within 30 days and submit the proof of payment. It is not refundable except when the court rejects the grant of immunity. Points to be noted in respect of compounding Immunity will be withdrawn if compoundin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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