Power to impose restrictions in certain types of cases [Rule 12CCC] :
Rule 12CCC empowers the Central Government to provide for certain measures including restrictions on a manufacturer, a registered importer, first stage and second stage dealer or an exporter. The Central Government can exercise such powers where having regard to the extent of evasion of duty, nature and type of offences or any other relevant factors, it is of the opinion that in order to prevent evasion of or default in payment of excise duty, it is necessary in the public interest to impose restrictions. The nature of restrictions, (e.g. suspension of registration in case of a dealer) types of facilities to be withdrawn and procedure for issue of such order by Chief Commissioner of Central Excise may be specified by a notification in the Official Gazette.
Notification No. 16/2014 CE (NT) dated 21.03.2012 specifies that Chief Commissioner of Central Excise may order for withdrawal of facilities or impose restrictions where a manufacturer, a registered importer, first stage or second stage dealer, or an exporter including a merchant exporter is prima facie found to be knowingly involved in any of the specified offences.
(1) Specified offences: The specified offences are:
(a) removal of goods without the cover of an invoice and without payment of duty;
(b) removal of goods without declaring the correct value for payment of duty, where a portion of sale price, in excess of invoice price, is received by him or on his behalf but not accounted for in the books of account;
(c) taking of CENVAT credit without the receipt of goods specified in the document based on which the said credit has been taken;
(d) taking of CENVAT credit on invoices or other documents which a person has reasons to believe as not genuine;
(e) issue of excise duty invoice without delivery of goods specified in the said invoice;
(f) claiming of refund or rebate based on the excise duty paid invoice or other documents which a person has reason to believe as not genuine;
(g) removal of inputs as such on which CENVAT credit has been taken, without paying an amount equal to credit availed on such inputs in terms of rule 3(5) of the CENVAT Credit Rules, 2004.
(2) Facilities to be withdrawn and imposition of restrictions: The Chief Commissioner of Central Excise may impose following restrictions if a manufacturer is knowingly involved in committing any of the specified offences:
(i) the facility of monthly payment of duties may be withdrawn and the assessee shall be required to pay excise duty for each consignment at the time of removal of goods;
(ii) payment of duty by utilisation of CENVAT credit may be restricted and the assessee shall be required to pay excise duty without utilising the CENVAT credit ;
(iii) the assessee may be required to maintain records of receipt, disposal, consumption and inventory of the principal inputs on which CENVAT credit has not been taken;
(iv) the assessee may be required to intimate the Superintendent of Central Excise regarding receipt of principal inputs in the factory on which CENVAT credit has or has not been taken, within a period specified in the order and the said inputs shall be made available for verification upto the period specified in the order.
(3) Removal to be under invoice signed by Inspector/Superintendent in case of subsequent offence: If a person is found to be knowingly involved in committing any one or more type of the specified offences for the second time or subsequently, every removal of goods from his factory may be ordered to be under an invoice which shall be countersigned by the Inspector/Superintendent of Central Excise before the said goods are removed from the factory or warehouse.
| Points to note:
(i) The person against whom the order for withdrawal of facilities or imposition of restrictions has been passed may continue to take CENVAT credit but he would not be able to utilize the credit for payment of duty during the period specified in the said order. (ii) Principal inputs means any input which is used in the manufacture of final products where the cost of such input constitutes not less that 10% of the total cost of raw materials for the manufacture of unit quantity of a given final products. |
(4) Term of imposition of restrictions: If the assessee commits any of the abovementioned offences for the first time, the period of imposition of restriction may not be more than 6 months. If the assessee commits any of the above-mentioned offences subsequently, the period of imposition of restrictions shall not be more than 1 year.
(5) Suspension of registration on availing CENVAT credit on fake invoices or issuing of invoice without delivery of goods: Where a first stage or second stage dealer is found to be knowingly involved in committing the type of offence specified at clauses (d) or (e), the Chief Commissioner of Central Excise may order suspension of the registration granted under rule 9 of the Central Excise Rules 2002 for a specified period. During the period of suspension, the said dealer shall not issue any central excise invoice. However, he may continue his business and issue sales invoices without showing excise duty in the invoice and no CENVAT credit shall be admissible to the recipient of goods under such invoice.
(6) Self-sealing facility of export consignment to be withdrawn on claiming refund/rebate on fake invoices: Where a merchant exporter is found to be knowingly involved in committing the type of offence specified at clause (f), the Chief Commissioner of Central Excise may order withdrawal of the self sealing facility for export consignment and each export consignment shall be examined and sealed by the jurisdictional Central Exc ise Officer.
(7) Monetary limit: The provisions of this notification shall be applicable only in a case where the duty or CENVAT credit alleged to be involved in any of the specified offences is more than ` 10 lakh.
(8) Procedure: The Commissioner of Central Excise or Additional Director General of Central Excise Intelligence, as the case may be, after examination of records and other evidence, and after satisfying himself that the person has knowingly committed the specified offences, may forward a proposal to the Chief Commissioner of Central Excise, to withdraw the facilities and impose restriction during or for such period, within 30 days of the detection of the case, as far as possible.
The Chief Commissioner of Central Excise shall examine the said proposal and after satisfying himself that the records and evidence relied upon in the said proposal are sufficient to form a reasonable belief that the person has knowingly done or contravened any of the specified offences, may issue an order specifying the type of facilities to be withdrawn or type of restrictions to be imposed, along with the period for which the said facilities will not be available or the period for which the restrictions shall be operative.
Before issuing the said order, the Chief Commissioner of Central Excise shall give an opportunity of being heard to the person against whom the proceedings have been initiated and shall take into account any representation made by such person.