LEGAL PROVISIONS OF RECOVERY OF ARREARS OF CENTRAL EXCISE

Section 11 of Central Excise Act, 1944

In respect of duty and any other sums of any kind payable to the Central Government under any of the provisions of this Act or of the rules made there under including the amount required to be paid to the credit of the Central Government under Section 11D, the officer empowered by the [Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963)] to levy such duty or require the payment of such sums may deduct the amount so payable from any money owing to the person from whom such sums may be recoverable or due which may be in his hands or under his disposal or control, or may recover the amount by attachment and sale of excisable goods belonging to such person; and if the amount payable is not so recovered, he may prepare a certificate signed by him specifying the amount due from the person liable to pay the same and send it to the Collector of the district in which such person resides or conducts his business and the said Collector, on receipt of such certificate, shall proceed to recover from the said person the amount specified therein as if it were an arrears of land revenue.

Provided that where the person (hereinafter referred to as predecessor) from whom the duty or any other sums of any kind, as specified in this section, is recoverable or due, transfers or otherwise disposes of his business or trade in whole or in part, or effects any change in the ownership thereof, in consequence of which he is succeeded in such business or trade by any other person, all excisable goods, materials, preparations, plants, machineries, vessels, utensils, implements and articles in the custody or possession of the person so succeeding may also be attached and sold by such officer empowered by the Central Board of Excise and Customs, after obtaining written approval from the Commissioner of Central Excise, for the purposes of recovering such duty or other sums recoverable or due from such predecessor at the time of such transfer or otherwise disposal or change.

SECTION 12

The Central Government may, by notification in the Official Gazette, declare that any of the provisions of the Customs Act, 1962 (52 of 1962), relating to the levy of and exemption from customs duties, drawback of duty, warehousing, offences and penalties, confiscation, and procedure relating to offences and appeals shall, with such modifications and alterations as it may consider necessary or desirable to adapt them to the circumstances, be applicable in regard to like matters in respect of the duties imposed by section 3.

SECTION 142 (1) (b) & 142 (1) (c) (ii) OF CUSTOMS ACT, 1962

AS MADE APPLICABLE TO LIKE MATTERS IN CENTRAL EXCISE VIDE NOT .NO. 68/63-CE DATED 04.05.1963, AS AMENDED (REFER PAGE 2)

Notification No. 68/63-C.E., dated 4th May, 1963 as amended by Notifications No. 9/65-C.E., dated 6th February, 1965; No. 46/68-C.E., dated 23rd March, 1968; No. 13/88-C.E. (NT.), dated 29-4-1988; No. 26/95-C.E. (N.T.), dated 6-6-1995 and No. 48/97-C.E. (N.T.), dated 2-9-1997.

Notification under Section 12

(1) In supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) Central Excise No. 69/59 (G.S.R. No. 822 of 1959), dated the 18th July, 1959, the Central Government hereby declares that the provisions of sub-section (1) of Section 105, Section 110, Section 115 [excluding clauses (a) and (e) of sub-section (1)] clause (a) of Section 118, Sections 119, 120, 121 and 124, clause (b) and sub-clause (ii) of clause (c) of sub-section (1) of Section 142 and 150 of the Customs Act, 1962, (52 of 1962), relating to matters specified therein, shall be applicable in regard to like matters in respect of the duties imposed by Section 3 of the first mentioned Act, subject to the following modifications and alterations which the Central Government considers necessary and desirable to adapt those provisions to the circumstances, namely :-

1. In the said provisions –

(i) references to “this Act” shall be deemed to be references to “the Central Excise Act, 1944 (1 of 1944) and the Central Excise Rules, 1944”;

(ii) references to “Assistant Commissioner of Customs” shall be deemed to be references to “Assistant Commissioner of Central Excise”;

(iii) references to “officer of customs” shall be deemed to be references to “Central Excise Officer not inferior in rank to a Sub-inspector”;

(iv) references to “proper officer” shall be deemed to be references to “proper officer as defined in clause (xi) of Rule 2 of the Central Excise Rules, 1944”; and

(v) references to “smuggled goods” shall be deemed to be references to “excisable goods which have been removed in contravention of any of the provisions of the Central Excise Rules, 1944”.

2. In the proviso to sub-section (2) of the said Section 110, –

the reference to “Commissioner of Customs” shall be deemed to be a reference to “Commissioner” as defined in clause (ii) of Rule 2 of the Central Excise Rules, 1944.

3. In the said Section 115 [excluding clauses (n) and (e) of sub-section (1)] – (a) in sub-section (1), –

(i) in clause (c), the reference to “Section 106” shall be deemed to be a reference to “Rule 200 of the Central Excise Rules, 1944”;

(ii) in clause (d), the reference to “claim for drawback” shall be deemed to be a reference to “claim for rebate”;

(b) in sub-section (2), –

(i) the reference to “smuggling” shall be deemed to be a reference to “removal of excisable goods in contravention of any of the provisions of the Central Excise Rules, 1944”;

(ii) the reference to “the rules” shall be deemed to be a reference to the “Central Excise Rules, 1944”;

(iii) in the proviso, the reference to “goods which are sought to be smuggled” shall be deemed to be a reference to “goods which are sought to be removed in contravention of any of the provisions of the Central Excise Rules, 1944”.

4. In the said clause (a) of Section 118, –

the reference to “goods imported” shall be deemed to be a reference to excisable goods in respect of which any of the provisions of the Central Excise rules, 1944, has been contravened”.

5. In the said Section 124, –

the reference to “under this Chapter” shall be deemed to be a reference to under any of the provisions of the Central Excise Rules, 1944″.

6. In clause (e) of sub-section (2) of Section 150, the reference to “any other law relating to customs” shall be deemed to be a reference to “any other law relating central duties of excise.

PROCEDURE FOR DEMAND/ RECOVERY OF DUES OF CENTRAL EXCISE, (AUTHORITY – CBEC’S EXCISE MANUAL OF SUPPLEMENTARY INSTRUCTIONS)

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 I 1 of the Central Excise Act. After exhausting the option of taking action as above, if dues remain unrecovered , 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 A 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, if a stay 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 initiated immediately thereafter.

1.5 In respect of cases decided by Commissioner of Central Excise (Appeals), Tribunal, Government of India or High Court, the assessee should be given a maximum period of one month from the date of communication of the Order to pay up the dues before resorting to any coercive action. In case of decision of Supreme Court of India, the assessee should pay the Government dues, if any, forthwith or else the recovery proceedings, shall be initiated within 15 days of the communication of the order.

1.6 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 new sub rule (4),provisions of Section 11 of the Act shall be applicable for recovery 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 guidelines are prescribed.

  • The range superintendent, immediately on receipt of the ER-1 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 (copy as per AnnexureA).

  • Simultaneously they should keep the notice, to be issued to the defaulter for his default in payment of the of the duty, ready, initiating the proposed action. (copy as per Annexure-B). 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 Rules, 2002, 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 proviso 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, 1 944, within one 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, 1 962.

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