Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs
New Delhi dated the May 22 , 2008
The Chief Commissioner of Central Excise (All)
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The Director Generals (All)
The Commissioner of Central Excise (All)
The Commissioner of Central Excise (Appeals) (All)
Subject: Observation of Delhi High Court regarding first proviso to section 11AC .
A reference has been received by the Board inviting its attention to the Delhi High Court judgment in the case of K.P. Pouches (P) Ltd [2008-TIOL-240-HC-DEL-CX]. In para 27 of the order, the High Court has opined that the adjudication authority should explicitly state the option available to the assessee under section 11AC of the Act in its adjudication order.
2. The matter has been examined . The first and second proviso to section 11AC of the Act read as follows;
“ Provided that where such duty as determined under sub-section (2) of section 11A, and the interest payable thereon under section 11AB, is paid within thirty days from the date of communication of the order of the Central Excise Officer determining such duty, the amount of penalty liable to be paid by such persons under this section shall be twenty-five percent. Of the duty so determined:
Provided further that the benefit of reduced penalty under the first proviso shall be available if the amount of penalty so determined has also been paid within the period of thirty days referred to in that proviso: “
It is seen that these proviso to section 11AC of the Act have been specifically inserted to ensure speedy recoveries of the disputed amount . It is an incentive given to the assessee that if he pays the duty amount along with interest, the penalty is reduced to 25% of the duty . This provision is beneficial to the department as well as the assessee as rightly pointed out by Delhi High Court and therefore, the assessee should be made aware of the option available to him.
3. In view of the points as discussed above, Board has decided that in all the cases, wherein penalty under section 11AC of the Act is imposed, the provisions contained in first and second proviso to section 11AC should be mandatorily mentioned in the Order-in-Original itself by the adjudicating authority .
4. The field formation may be suitably informed .
Yours faithfully ,
( Rahul Nangare )
Under Secretary to the Government of India
Copy to: Commissioner (Customs), Central Board of Excise & Customs- The above mentioned circular may be examined for issue with respect to Customs cases also .