OVER VIEW

OF
CENRAL EXCISE
LAW
Mandalika Srinivas
Commissioner C,Ex & ST Hyd- 1&3
 AGENDA

1 INTRODUCTION 16 EXPORT BENEFITS

2 LEVY 17 DEMAND
3 EXCISABLE GOODS 18 INTEREST
4 MANUFACTURE 19 PENALTY
5 C.EX. TARIFF 20 OFFENCES & PENALTIES
6 VALUATION RULES 21 ACCEESS TO REGISTERED PREMISES
7 RSP BASED VALUATION 22 SEARCH & SEIZURE
8 COMPOUND LEVY 23 POWER TO ARREST & SUMMONS
9 REMISSION 24 ADJUDICATION
10 EXEMPTION 25 ADVANCE RULING SETTLEMENT COMMN. & APPEALS
11 REGISTRATION 26 SPECIAL AUDIT
12 CENVAT CREDIT RULES 27 RECOVERY
13 REMOVAL , SELF ASSESSMENT & Provl. Assmnt. 28 PROVISIONAL ATTACHMENT
14 DUTY PAYMENT 29 REFUND
15 RECORDS & RETURNS 30 GENERAL.
 INTRODUCTION
•  PARENT STATUTE:- Central Excises and Salt Act, 1944 – enacted on
24.02.1944 ( w.e.f: 28.02.1944 )

• 24th February : celebrated as - “Central Excise Day”

• CEA - Consolidated and amended Law - relating to Central Duties of

Excise.
- specific statutes for levy of Excise Duty on different commodites existing
prior to 1944.

• Central Excise Act, 1944 – w.e.f. 28/09/1996 ----Finance Act, 1996

 INTRODUCTION
Other Relevant Statutes:
Central Excise Tariff Act, 1985; ( CETA )
Central Excise Rules, 2002; ( CER )
CENVAT Credit Rules, 2004; ( CCR )
Central Excise Valuation (Determination of Price of Excisable
Goods) Rules, 2000; ( CEVR )
 Notifications issued under Central Excise Act, 1944;
• Several other Rules made u/ Sec. 37 of CEA = Sec 156 of CA’62.
 OTHER IMPORTANT RULES
• Central Excise (Appeals) Rules, 2001

• CESTAT Procedures Rules, 1982

• Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of

Excisable Goods) Rules, 2001

•  Central Excise (Determination of Retail Sale Price of Excisable Goods ) Rules, 2008

•  Central Excise (Compounding of Offences) Rules, 2005

• Central Excise (Settlement of Cases ) Rules, 2007

• Consumer Welfare Fund Rules, 1992

• Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 etc.
 PAYMENT
FACTORY LEVY DEFAULT
REGISTRATION EXCISABILITY INTERST LIABILITY
JOB WORKER PENAL LIABILITY
MANUFACTURE CENVAT
RECOVERY
(TAXABLE EVENT)
CREDIT REFUND
Capital goods REBATE
Inputs &
input services SPECIAL AUDIT
REMOVAL
- INVOICE // VALUE - INDICATE DUTY ARREST
ASSESSMENT SUMMONS
- DTA - Duty liability
SEARCH
- CAPTIVE CONSUMPTION- DUTY/EXEMPTED CLASSIFICATION -- TARIFF SEIZURE
- RATE OF DUTY & EFFECTIVE RATE PROSECUTION
- JOB WORK - EXEMPTED
Rate of Tax : Specific / Ad veloram
- 100% EOU - EXEMPTED SHORT/ NON – LEVY / PAYMENT
DEMAND
- EXPORT- NO DUTY LIABILITY ( DUTY= Rebate) VALUATION ADJUDICATION
- Transaction Value CONFISCATION
- Valuation as per Rules REDUMPTION FINE
- SEZ = EXPORT
- Valuation w.r.t RSP/MRP
- THEFT / PILFIRAGE – Duty liability - Tariff Value APPEALS – CCE(A)/ CESTAT/HC/SC
SETTLEMENT COMMISSION
- UNFIT / destruction - REMISSION SEC. 11D OF CEA
COMPOUNDING OF OFFENCE
CENTRAL EXCISE RETURNS GENERAL
Section 1: Short title, Extent and Commencement:-

• Short title - Central Excise Act, 1944

• Extent - It extend to whole of India.

“except the State of Jummu & Kashmir” was omitted :: vide Sec.2 and Schedule of
-Taxation Laws (Extension to Jammu and Kashmir) Act,1954

• India - includes the Continental Shelf and Exclusive Economic Zone of India - as
declared by the Notification S.O.No.429(E), dated 18.07.1986 - of the Ministry of
External Affairs, GOI.

• BOMBAY HIGH = 162 Km / 101 miles. – CRUDE – attracts cess- collected as Excise
Duty.
• ST- FA’94-- not applicable in J&K – but applicable in EEZ: 14/2010 ST 27.02.2010 (for
specified purposes).
• Commencement
– From the date notified by the Central Government
- w.e.f: 28.02.1944- vide F.D.(C.R) Notfn No. III-D.C Exc. dtd: 26.02.1944.
• Extended to

- Goa , Daman and Diu by Regulation No.12 of 1962

- Dadra and Nagar Haveli by Regulation No.6 of 1963
- Lacadive , Minicoy and Amindivi Islands by Regulation No.8 of 1965
- Sikkim vide Notfn.No.9/83 CE dtd.01.02.1983.
 DEFINITIONS
Sec 2 of CEA:- provides definitions of the terms/words used
therein.

Rule 2 of CER- definitions

Rule 2 of CCR- definitions

Rule 2(i) of CER / Rule 2 (t) of CCR : words & expressions

used in but not defined & defined in the Act shall have the
meanings respectively assigned to them in the Act.
 DEFINITIONS
• Adjudicating Authority
• Appellate Tribunal
• Broker
• Central Excise Officer
• Curing
• Excisable goods
• Factory
• Fund
• Manufacture
• Prescribed
• Sale and Purchase
• Whole Sale Dealer
 LEVY
• LEVY = impose or an act of levying - TAX / DUTY.

Sec. 3 of CEA : Charging Section: (AUTHORITY for LEVY = Sec. 12 of CA )

 - there shall be levied and collected a duty of excise called CENVAT - - in the manner
prescribed; on all excisable goods – produced or manufactured - in India

- @ specified in First and Second Schedules of Central Excise Tariff Act, 1985 ;
( 1st Schedule = BED & 2nd Schedule = SED*)

  * excluding the goods produced/manufactured in SEZ ;

Criterion for levy: Manufacture; Excisable Goods; & in India.

-- all criterion needs to be satisfied – otherwise CENVAT cannot be levied [Hindisthan

Zinc Ltd – 2005(181) ELT 170 SC ]
 LEVY
BED: Sec 3 of CEA;
Addl. Duty of Customs – Sec. 3(5) of CTA = CVD.
ED- Cess : Sec 93 of FA 2004;
SH Ed Cess : Sec 136 of FA 2007;
Clean Energy Cess : Sec 83 of FA 2010 ( Clean Environment Cess );
Infra structure Cess on Motor Vehicles : 159 of FA 2016;
Addl. Duty on Motor spirit Sec. 111 of FA, 1998;
National Calamity Contingency Duty : Sec. 136 of FA, 2001;
Addl. Duty of Excise ( T & T ) Act, 1978;
Sugar Cess : Sec. 3 of Sugar Act, 1961
Addl. Duty of Excise ( Goods of Special Importance ) Act,1957- on Tobacco ,
Beedi etc.
Natural Gas Cess : Sec. 15 of Oil Ind. Development Act, 1974 @ 300/- Cu MT.
 MANUFACTURE
Sec. 2(f): manufacture” means any process, -
  (i) incidental or ancillary to the completion of a manufactured product;
 
(ii) which is specified in relation to any goods in the Section or Chapter notes of the First
Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting to manufacture; or
 
 (iii) which, in relation to the goods specified in the Third Schedule, involves packing or
repacking of such goods in a unit container or labelling or re-labelling of containers including
the declaration or alteration of retail sale price on it or adoption of any other treatment on the
goods to render the product marketable to the consumer;(2003)
--- any process that results in emergence of a new and different Commodity
having distinct name , character and use – to be called as manufacture -
Empire Inds. Ltd- UOI – 1985(20) ELT. 179 SC. 
and the word “manufacturer” shall be construed accordingly and shall include not only a
person who employs hired labour in the production or manufacture of excisable goods,
but also any person who engages in their production or manufacture on his own account;
 EXCISABLE - GOODS
• Sec. 2(d): Excisable goods means – 
Goods specified in 1st Schedule and 2nd Schedule to the Central
Excise Tariff Act, 1985 (5 of 1986) as being subject to a duty of
excise and includes salt.
 
• Explanation - For the purposes of this clause, “goods“ includes
any article, material or substance which is capable of being
bought and sold for a consideration and such goods shall be
deemed to be marketable. ( w.e.f: 10.05.2008)

Sale of Goods Act , 1930 - All movable items are “Goods”

 CENTRAL EXSCISE TARIFF ACT , 1985
• Selectively ALIGNED TO HSN ( Harmonized System (HS) of tariff nomenclature is an internationally
standardized system of names and numbers to classify traded products.)
• interpretative rules.
• THREE SCHEDULES :- 1st SCHEDULE – – 96 ( 97 & 98 -blank ) CHAPTERS / 20 Sections - -8
digit code;
• RATE OF BASIC EXCISE DUTY – ad veloram / specific / or both
Eg: Filter Cigarettes: > 75mm- < 85 mm @ 2390/- per 1000 units (Tu);
HSD : 14% + Rs. 5/- per litre. ; Motor Spirit: 14% + Rs. 15/- per lit.

2nd Schedule : Special Excise Duty – all goods – wholly exempted – U/ Sec. 5A of CEA – Nfn.NO:
09/2006-CE Dtd: 01.03.2006
3rd schedule – goods in respect of which - packing /re-packing; labelling / re-labelling ; declaration
/ alteration of RSP; or any other treatment- which renders them marketable - amount to Mfr.
Eg: tooth brush, watches, paints & warnishes; water, Aerated water, modems etc.
• Tariff Rate Vs Effective Rate - Exemption Nfn – Value based / partial / absolute.
 Goods Mfrd in 100% EOU
• Proviso – to Sec 3(1) of CEA:
• Duties of excise shall be levied and collected on any excisable goods
which are produced or manufactured in a 100% EOU and brought to any
other place in India.
 
- Shall be an amount equal to the aggregate of duties of customs
 
-- levied under Customs Act or any other law for time being in force, on
like goods produced or manufactured outside India and imported into
India; if such goods were charged on ad valorem basis , the value of such
goods should be in accordance with Customs Act, 1962 and Customs Tariff
Act, 1975 irrespective of anything contained in any provision of this Act.
 VALUATION
• Sec 4: where the duty is w.r.t value (w.e.f 01.07.2000)
- if goods are sold – the price for delivery at the time and place of removal-- where the
buyer is not related to assessee & price is the sole consideration for sale , be the
transaction Value ;
• In any other case, including when goods are not sold – as determined as per – Central
Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000; (CEVR)
Transaction Value- means the price actually paid or payable for the goods, when sold, and includes in
addition to the amount charged as price, any amount that the buyer is liable to pay to, or on behalf of, the
assessee, by reason of, or in connection with the sale, whether payable at the time of the sale or at any other
time, including, but not limited to, any amount charged for, or to make provision for, advertising or publicity,
marketing and selling organization expenses, storage, outward handling, servicing, warranty, commission or any
other matter; but does not include the amount of duty of excise, sales tax and other taxes, if any, actually paid or
actually payable on such goods.

• Sec. 3(2) : C. Govt. can fix Tariff Value- on any goods. – pan masala-
upto 2 gms- 1.50 per unit pack; 2-4 gms: 3.00 per pack; > 4 gms: 3.00 + 1.25 per gm or
part there of.
 C.Ex. Valuation Rules, 2000 – in brief.
R/4– V shall be based on such goods sold at the nearest time –with such adjustments.
R/5 – when sale for delivery at a place other than the place of removal – cost of
transportation to be added.
R/6 - where price is not the sole consideration– money value of additional consideration- to
be added;
R/7- for sale through depot/ consignment agent – normal transaction value from such other
place – at the nearest time – with such adjustments;
R/8 - Captive consumption/clearance to sister unit - 110% of Cost of Prodn. (CAS4)
R/9 – where goods -sold to or through related person(RP) – sale price of RP;
if RP doesn’t sell – as per Rule 8 above.
R/10 – sale to or through inter-connected undertaking- as per R/9 above.
R/10A-valuation when goods mfrd. by Job worker & remove on payment – to principal Mfr.
R/11: Best Judgement – consistent with one or more above methods.
 RSP / MRP BASED VALUATION
• Sec. 4A of CEA: ( 14.05.1997) Two imp. Criterion - Goods
(i) should be notified under this act ( u/ sec 4A) - for this purpose;
(ii) declaration of RSP on the package should be mandatory -
under Legal Metrology Act , 2009 & its Rules.
RSP = MRP : @ sold to ultimate consumer- inclusive of all Taxes.
Where duty is w.r.t. value & RSP is declared for notified goods –
VALUE shall be : RSP – less the abatement notified;
 If no RSP or RSP was tampered – confiscation
 RSP to be determined in the manner prescribed – Rules.
 Compounded Levy
• Section 3A –
• Power of Central Government to charge Excise Duty on the
basis of capacity of production in respect of notified goods

Eg: Chewing Tobacco ;

Scented Jarda ;
Pan Masala – w/o Tobacco ; &
Pan Masala - with Tobacco.
 Remission of Duty
• Sec 5 of CEA: Remission of duty found deficient in Quantity –
Due to natural causes – C. Govt can prescribe limits;

Rule21 of CER: Remission of duty can be granted for :

- any Manufactured Goods- if:
--lost / destroyed – due to accident or natural causes;
-- become unfit - for H’ consumption or - for marketing ;
--- at any time before removal.
 in r/o goods cleared for export – up to port of shipment.
 Exemption
Sec. 5A:Power to grant exemption from duty of Excise: ( = Sec 25 of CA )
Sec. 5A(1) -by C. Govt. – by notification -- in public interest
-- exempt – absolutely or subject to conditions;
-- from whole / part of duty - leviable thereon;
-- unless specified in Nfn. - are not applicable to EOU/SEZ

Sec. 5A(1A): - absolute exemption from whole of duty – no option to

pay duty.

Sec. 5A (2): specific exemption – under exceptional circumstance – by

special order.
 Exemption
General:
 All Nfns. are to be treated as a part of the statute.
All notifications are effective from the date of publication in official
gazette; ( requirement to offer for sale - omitted)
 All notifications are prospective unless specified.
 Future effective date if any – as specified therein.
 Tariff Rate Vs Effective Rate
 Exemption Nfn – Value based / conditional
 Exemption Nfn –partial / absolute.
 Eg: Nfn No: 8/2003-CE dt. 01.03.2003; 67/95-CE
dtd:16.03.1995; 214/86-CE dtd: 25.03.1986
 POWER TO EXEMPT – GENERAL PRACTICE
Section 11C: Power not to recover duty of excise not Levied or
short levied as result of general practice:- ( Sec. 28A of CA )
- If Central Government is satisfied that non/short levy of duty was
due to general practice
- by notification in the Official Gazette
- direct that duty of excise shall not be required to be paid;

Sec. 11C(2): Once Nfn. as above was issued – amount already paid
if any – shall be dealt with as per Sec. 11B of CEA.
-- claim for refund can be made before expiry of 6 months from the
date of the Nfn. Issued.
 REGISTRATION
Registration- PAN based ; online form-ACES ; RC to be generated in 2 working days
- post verification – with in 15 days; (AAAAA1111A XM 001)
 Sec. 6 of CEA : & Rule 9 of CER:
The following categories of persons require registration – as prescribed & subject conditions:
Notification No.36/2001 CE(NT) dt.26.06.2001.
  (1) Manufacturer/producer of dutiable excisable goods
 
(2) First and second stage dealers( including manufacturer’s depots and importers) desirous to issue
cenvatable invoices.
 
(3) persons who stored non-duty paid goods.
 
(4) Persons who obtain excisable goods for availing end-use Exemption

(5) Manufacturers exporting under rebate/bond procedure; EOUs and SEZ units which clears goods to
DTA or procure duty paid inputs.

--- SSI units to obtain RC once they cross 90 lakhs – value of clearances.
 CENVAT CREDIT RULES IN BRIEF.
• COMMON For Goods & Services;
• CENVAT Credit: of Duties Specified in R/3(1) of CCR paid on - Capital
Goods ; Inputs & Input Services – can be taken on receipt as CREDIT;
- can be utilised for discharging liability on final products ; & output services
or both.
- Credit allowed on inputs used in intermediate goods by job worker
- On CGs – 50% credit in the year of receipt and balance in any subsequent
year.
- For inputs/input services – 100% Credit – on receipt at factory or at the
job workers’ premises.
- Credit – can be utilised for- payment of : ED; ST; CENVAT on inputs/capital
Goods- if removed as such ; amount u/16(2) of CER.
 CENVAT…
• CENVAT on CGs – admissible even if take on lease / hire purchase
• CENVAT not allowed on that part of the value-claimed as depreciation.
• CENVAT –allowed even if input received directly by job worker – but to be
revered if the processed goods not received in 180 days;
• INPUTS/ CGs – removed as such – amount equal to CENVAT taken shall be
paid;
• CGs- removed after being used – reduced CENVAT as per the formula given;
• If value of Inputs/ CGs before being put to use- are written off fully/partially
– or provision is made – CENVAT taken has to be paid back.
• Where remission of duty allowed – credit taken on input / input service–
has to be reversed.
 CENVAT…
Rule 16 of CER : Credit of duty on goods brought to the factory:-
 
(1) When duty paid goods are brought into the factory for re-making, refining, re-
conditioning or for any other reason, assessee can take CENVAT Credit of the duty paid as if
the goods received are inputs under CENVAT Credit Rules ;
 
- Can Utilise the credit as per CENVAT Credit Rules (CCR)
 
(2) If the process did not amount to manufacture, the assessee shall pay amount equal to
Credit taken;
 -- in any other case, the assessee shall pay duty on the goods at the rate applicable on the
date of removal and the value determined under Sec.4/4A.
 
(3) If there is any difficulty in following sub-rule (1) and sub-rule (2) the assessee can receive
goods for re-making, refining, re-conditioning or any for any reason and remove them
subsequently subject to the conditions specified by Principal Commissioner/Commissioner.
 CENVAT…
R/5 of CCR:- Cash Refund of CENVAT credit in r/o export goods

R/6 of CCR:- CENVAT – not admissible if used in exempted

goods ( includes NIL rated goods);
- Common inputs of value – separate account ;
or pay credit attributable or 6% of value of exempted final
products and 7% value of exempted services;
-no CENVAT on capital goods used exclusively for manufacture
of exempted good;
 CENVAT…
R/10 of CCR:- Transfer of Credit allowed in case of – shift /sale amalgamation / merger /
lease / transfer to JV - with transfer of liability; - subject to satisfaction of AC/DCCE.
R/10A of CCR:- Unutilised credit of CVD can be transferred to sister unit;
R/14 of CCR:- Recovery of CENVAT:-
– credit taken but not utilised- Sec 11A / Sec 73 of CEA/FA (no interest liability);
-- Credit taken & Utilised : Sec 11A / Sec 73 of CEA/FA and Sec. 11AA & Sec. 75;
– applicable mutatis mutandis;
R/15 of CCR:- Confiscation & Penalty:
(1) w/o mens rea – Rs 2,000/- or equal to duty / ST , which ever is higher;
(2) With mens rea – As per Sec 11AC of CEA / Sec 78 of FA’1994.
- Penalty – imposable in compliance to Principles of Natural Justice.
R/15Aof CCR:- General Penalty-where no specific Penalty - not > Rs. 5000/-
 REMOVAL, ASSESSMENT & PROV. ASSESSMENT
R/4 of CER: Duty payable on removal
- as provided in R/8 of CER by Mfrr. / producer of goods;
- except – Molases - Khandasari sugars mfrr.- by procurer.
R/5 of CER: Rate and tariff value as on the Date of removal – to
be applied.
R/6 of CER: Assessee himself to assess goods;
except Cigarettes- by Supdt. / Inspr.
R/7 of CER: Provisional assessment:- Option of assessee;
AC/DC to decide PA- order; Bond+ Security.
 DUTY PAYMENT
R/8(1)of CER: Duty on goods removed from the factory shall be paid - By 6th of
the following month if it is paid electronically or through internet banking and by
5th of the following in any other case.
--- For the month of March - by 31st March
Assessees claiming exemption under Notification based on value of clearances in
a financial year (SSI nfn) - By 5th of the month following the quarter-For Q.E.4
(Jan- Mar.)by 31stMarch.
 R/8(2):- Duty of excise shall be deemed to have been paid on excisable goods
removed in the manner provided under sub-Rule (1) and the credit of such duty
can be allowed;
R/8(3) & (3A) – defaulted duty – with interest -;; > 1month – Penalty @ 1% p.m.
R/8(4) – defaulted amount – to be recovered u / Sec 11 of CEA- as arrears.
 RECORDS & RETURNS
R/10 of CER: Daily stock account: record of production/
clearance/assessable value/amount of duty payable on goods
removed & duty actually paid -- to be preserved for 5Yrs.
R/11 of CER: All goods should be removed under an invoice
-- should contain - Registration number ; address of
Division; name &address of consignee; description; Qty.; value
& Duty.
-- invoice to be serially numbered – single book at a time;
-- to be signed by owner/authorised agent – except when digital sign used.
-- in case of cigarettes – supdt. / Inspr. – should counter sign;
 RECORDS & RETURNS

R/12 of CER: Every assessee should file ER-1 return (with in 10

days of close of month; SSI- 10 days – Quarter.
-- returns should be filed online in ACES;

R/17 of CER: Removal of goods by 100% EOU:- ER-2 return for

EOU- within 10 days; removal under invoice; duty as per R/8 of
CER.
 EXPORT benefits
Rule 18 of CER: Rebate of duty :- paid on goods exported or Duty of excise paid on
materials used in the manufacture or process of such goods shall be granted;
--Subject to conditions/limitations as specified in the Notification.

Rule 19 of CER: Export of goods on payment of duty :-

- Any goods may be exported without payment of duty from a factory/ warehouse.
- Any material may be removed without payment of duty --For use in the
manufacture/processing of goods which are exported;
--Subject to the conditions, safeguards, limitations provided in the Notification.

Rule 5 of CCR: Refund CENVAT Credit- accumulated on goods exported w/o payment of
duty.
(ET of goods + ET of Services / total turnover X Net CENVAT Credit)
- In cash ; UNJUST ENRICHMENT – NOT APPLICABLE for Exports benefits.
 DEMAND
Sec 11A of CEA: Recovery of dues not levided / not paid / short levied / short paid /
erroneously refunded:-
- normal cases -- Show cause Notice - to be issued Within two year from the relevant date
-- if pays all dues with interest - before service of notice,- No show SCN shall be issued;
 
• In case of suppression, wilful mis-statement/ fraud/ collusion/ contravention with
intention to evade -- show cause notice within 5 years from the relevant date.
 
• Provisions of demand of duty - are applicable for recovery of interest, too.
 
• Provisions of demand are not applicable in respect of the amount shown as payable in the
periodical return (default) - In such case of default, recovery proceedings can be initiated.
• CEO – after PH & considering representation , if any , determine the amount due – not in
excess of the amount demanded in the notice.
these provisions – applicable for recovery of CENVAT – in terms of Rule 14 of CCR.
 Liability & Recovery of Amount collected as ED or in excess of ED
paid
Section 11D : Duties of excise collected from the buyer to be
deposited with Central Government: ( w.e.f : 20.09.1991) = Sec 28B of CA
-- Any amount collected in excess of the duty assessed from the
customer
-- Any amount collected representing duty of excise on any
exempted goods or nil rated goods
---Representing duty of excise;
 
Section 11 D(2) :
• If not paid show cause notice to be issued & determined – PNJ.
• For an amount to be specified in the notice.
 INTEREST LIABILITY
Section 11AA : Interest on delayed payment [ = Sec. 28 AA of CA ]
• 10% to 30% : Current rate 15%
• Interest payable in addition to the duty no paid from the date of
which the duty become due up to the date of actual payment of duty.
• Applicable to CENVAT – in terms of Rule 14 of CCR.
Section 11 DD :
• Interest on amounts collected in excess & not paid to GOI.
• In addition to the amount payable under Sec.11D interest at the rate
specified (10% to 30%) shall be paid : Current rate : 15%.
• From the first day of the month succeeding month in which the
amount ought to have been paid till the date of such payment.
 PENALTY
Sec. 11AC: – Penalty FOR SHORT / NON - LEVY / PAYMENT OR ERRONEOUS REFUND:-
(a) in cases other than suppression, fraud, etc., with NO intent to evade payment of duty - Penalty
not exceeding 10% of duty or Rs.5,000/- ---Whichever is higher;
-- if the duty and interest are paid either before SCN / within 30 days of issue of notice, no penalty shall
be payable and all proceedings to be concluded.

(b) Where duty confirmed and interest under Sec.11A are paid within 30 days of communication of Order
in Original - penalty shall be 25% of the penalty imposed ----Provided that penalty is ALSO paid within
30 days.

(c) in case of fraud, collusion, suppression, etc.-- Penalty equivalent to the duty is imposable
- if the transactions are recorded in the specified records penalty shall be 50% of the duty.
(d) where the duty demanded in the show cause notice and interest are paid within 30 days of
communication of show cause notice
-- Penalty shall be 15% --Provided duty, interest and penalty are paid within 30 days of SCN -- In such
cases all proceedings stand concluded.
(e) If the duty determined and interest are paid within 30 days, the assessee is liable to 25% penalty
provided such reduced penalty is also paid within 30 days from the Order-in-Original.
Applicable to CENVAT cases also – in terms of R/15(2) of CCR
 Other penal provisions
Rule 25 of CER:- Confisaction and penalty:- Subject to provisions of Sec 11AC of CEA-
- any manufacturer or produce or registered person or warehouse or importer or registered
dealer is Liable for penalty if :

(a) removes excisable goods in contravention of any of the provisions or rules/notifications;

 
(b) does not account for the excisable goods manufactured, stored by him;

(c) engages in the manufacture, production, or storage of any excisable goods without
having applied for the registration;

(d) contravenes any of the provisions of rules/notifications issued under these rules with an
intent to evade payment of duty.
- Not exceeding the duty or Rs. 2000/- - which ever is higher;
- Order for imposing Penalty – following Principles of Natural Justice( PNJ ).
 Personal Penalty & General Penalty
• Rule 26 of CER: Penalty for Certain Offences:-
- on persons concerned in transporting, removing, depositing, keeping, concealing,
selling or purchasing or any other manner deals with any excisable goods
-- Which he knows or has reason to believe are liable to confiscation ;
- PP-not exceeding the duty or Rs. 2000/- - which ever is higher;

R/26(2):- Any person- if issues/ abets in issuing excise duty invoice w/o delivery of
goods or any other document – to facilitate taking ineligible benefit like
CENVAT/Refund etc- shall be liable for PP-not exceeding the duty or Rs. 2000/- -
which ever is higher;

Rule 27:General Penalty:-Where no other penalty expressly provided for breaching

of any provision, penalty may extend to Rs.5,000/- and with confiscation.
 Offences & Penalties
Sec. 9 of CEA: Offences and penalties:-
- Where the duty leviable exceeds Rs.50 lakh
-- Who ever commits offence specified therein shall be liable for
imprisonment - up to 7 years and with fine;

--- Minimum period of imprisonment shall be 6 months except for

special and adequate reasons to be recorded in he judgement.
• In any other case (other than specified offences) with
imprisonment Up to 3 years or fine or with both;

- 7 yrs- for second / every subsequent offence;

 Access to a registered premises
Rule 22 :Access to Registered Premises
• An officer empowered by Principal Commissioner/ Commissioner shall
have access to any premises under these rules for the purpose of carrying
out any scrutiny/checks as the case may be to safeguard the interest of
revenue.
• Every assessee, importer who issues cenvatable invoices, first and second
stage dealer shall furnish a list of various records including the financial
records/statements.
•  All such registered persons, on demand make available all the records to
the Audit parties or Comptroller and Auditor General of India and
Chartered Account or Cost Accountant nominated under Sec.14A, 14AA of
the Act - For scrutiny etc.
 SEARCH & SEIZURE
Section 12F :Power to search and seizure-
- Joint Commissioner or Additional Commissioner can or authorise;
- for reasons to believe that confiscation of any goods, documents,
books or things useful for relevant proceedings are secreted in any
place;
Rule23 of CER: Power to stop and search:-
-Any Central Excise Officer may search a conveyance carrying excisable
goods
Rule24 of CER: Power to detain or seize the goods:-
-Central Excise officer may detain/seize any goods for reasons to believe
that they were liable to pay excise duty, but no such duty was paid.
 POWER TO ARREST & SUMMON
Section 13 :Power to arrest:-
-with the approval of Principal Commissioner/Commissioner, any Central Excise
Officer not below the rank of Inspector of Central Excise may arrest any person
whom he has reason to believe to be liable for punishment under the Act or
Rules made thereunder.
 
Section 14: Power to summon:
- any persons
- to give evidence in person and / or to produce documents or any other thing;
- For any inquiry under this Act
- CEO considers it necessary.
- Every such inquiry is deemed to the judicial proceeding with in meaning of
Sec 193 & Sec. 228 of IPC,1860.
 Adjudication
Sec. 33 : Power of Adjudication :-
 
(a) without limit by Principal Commissioner/Commissioner
 
(b) confiscastion of goods not exceeding Rs.500 in value and imposition of penalty not
exceeding Rs.250/- by an Deputy/Assistant Commissioner
 
But CBEC may confer the powers indicated in clause (a) or (b) of this Section- to any other
CEO.
 
Monitory limits- for adjudication of cases under Sec. 11A & Sec. 33 of CEA- executive
instructions :
- Up to 1 lakh - Supdt.; > 1 lakh to 5 lakhs – AC/DCCE;
- > 5lakhs to 50 lakhs- JC/ADC;
- > 50 lakhs –without limit – Commissioner/ Principle Commissioner
 ADJUDICATION…
Section 33A :Adjudication procedure
- Adjudicating Authority shall give an opportunity of being
heard to the party in any proceedings, if the party so desires.
-- If sufficient cause shown-Adjudicating authority at any stage
can adjourn the hearing for reasons to be recorded in writing.
---Provided no such adjournment shall be granted more than
three times to the party.
Sec.34: Option to pay Fine in lieu of confiscation
Sec.34A: Confiscation or penalty under this Act/ Rules – not to
interfere with other Punishments.
 ADVANCE RULING , SETTLEMENT & APPEALS
Sec. 23A to 23H : Advance Ruling(Sec. 24 to 30 : Omitted)

Sec. 31 to 32(P) :- Settlement Commission

Sec. 35, 35A to 35R, 36 : Appeals before
Commissioner(Appeals),
Tribunal,
High Court; and
Supreme Court.
 Special audit by Cost A/ct. or Chartered A/ct.
Sec. 14A: Special Audit in certain cases: At any stage of enquiry, investigations or any other proceedings
any Central Excise Officer not below the rank of DC/AC --
 -- If feels - the value has not been correctly declared or determined by a manufacturer/any person
-- With the prior approval of the Principal Chief Commissioner/Chief Commissioner,
-- direct such manufacturer or such person to get the accounts of his factory, office, depots, distributors or
any other place audited by a Cost Accountant/Chartered Accountant nominated by the Principal Chief
Commissioner/Commissioner.
 Sec. 14 AA: Special Audit in cases where credit of duty availed or utilised is not within the normal limit--  
-- if Principal Commissioner/Commissioner has a reason to believe that the credit of the duty availed or
utilised by any manufactured
-- is not within the normal limits or was availed/utilised by fraud, collusion, mis-statement, suppression of
facts, etc.,
-- direct the manufacturer to get the accounts of factory, depot, distributor as specified him audited by a
Cost Accountant/Chartered Accountant nominated by him.
 RECOVERY
Sec. 11(1) : Recovery of sums due to Government
- By adjusting against the amount owing to the assessee
-- By attachment and sale of the goods under the control of the department
--- Certificate Action --through District Collector, who should recover as if the
amount specified in the certificate as if it were arrears of land revenue.
--Proviso: - from the successor to whom the assessee disposed or transferred
the business or trade of the person who was liable to pay dues to the
Government.
(2) In writing – to other person from money is due to defaulter;
Sec. 142 of CA 62:- applicable to recover C.Ex. Dues;
Sec. 12 of CEA:- Application of provisions of Customs Act, 1962 to C.Ex duties –
relating to Levy, Exemptions, DBK, Warehouse , offences & Penalties;
Confiscation , Procedure related to offences & Appeals- with suitable
modifications.
 PROVISIONAL ATTACHEMNT & 1ST CHARGE
Sec.11 DDA : Provisional attachment to protect revenue in certain cases. ( =Sec. 28 BA of CA)
- During pendency of proceedings under Sec.11A or Sec.11D, Central Excise Officer is of the opinion
that for the purpose of protecting interest of revenue, with the approval of he Principal
Commissioner/Commissioner (by order in writing) attach provisionally any property belonging to
the person to whom the notice was served in accordance with the Rules made under Sec.142 of
Customs Act 1962.
 
Provisional attachment shall cease to have effect after the expiry of period of six months.
 
However, Principal Chief Commissioner/Chief Commissioner for reasons to be recorded in writing
may extend for further period- Total period of extension shall not exceed two years
 
Period of pendency of claim before Settlement Commission can be excluded from the above
period(date of filing application till the disposal of the case by the Settlement Commission).

Sec. 11E : Liability under the Act to be the first charge – subject to various acts like Companies
Act,1956 ; Financial Institutional Act,1993 – on the property of the person liable to pay the dues.
 REFUND
Sec. 11B : Claim for refund of duty and interest:
-- Within one year from the relevant date;
 -- Subject to proof of not passing incidence of duty claimed as refund
-- unjust enrichment
 --application in prescribed form- with all documents-including docs. to
prove that the amount claimed was not passed on to any other person
(UNJUST ENRICHMENT )
-- Refund includes Rebate
---Relevant date- Date of export/ date of payment; date of adjustment
on finalisation of PA; date of
Purchase of goods; date of special order U/ Sec. 5A(2) of CEA.
 REFUND
Sec. 11 BB : Interest on delayed refund: Not below 5% and not
exceeding 30%
- As fixed by the Central Government by notification--Current Rate: 6%.
-- after expiry of 3 months from the date of receipt of refund
application – till the date of refund.

Sec. 12B : Presumption that the incidence of duty has been passed to
the buyer -- Unless contrary is proved by the assessee- incidence of
duty paid on any goods shall be deemed to have been passed on to the
buyer of such goods. ( = Sec. 28 D of CA )
 GENERAL
Sec 12 E: A Central Excise Officer may exercise the powers and
discharge the duties conferred or imposed in the Act on any
officer subordinate to him.
-Commissioner (Appeals) shall not exercise the powers and
discharge duties of Central Excise Officer other than those
specified in Sec.14 of Chapter VIA.

Sec. 37 :Power of Central Government to make Rules -Central

Government can make Rules to carry into effect the purposes
of this Act. ( = Sec. 156 of CA )
– CER/CCR/Valn Rules Appeal Rule etc.
 General …
Sec.37A: Delegation of powers
- Central Government by notification in the Official Gazette can delegate the
powers of Board to the Principal Chief Commissioner or Chief Commissioner or
Principal Commissioner or Commissioner .
- Powers of Principal Commissioner/ Commissioner can be delegated to
Additional Commissioner/Joint Commissioner
-- Powers of Addl. Commissioner/Jt.Commissioner can be delegated to Dy.
Commissioner/Asst. Commissioner.
-- Powers of Dy. Commisisoner/Asst. Commissioner can be delegated to any
Gazetted Officer. 
Sec 37B: Instructions to Central Excise Officer: binding on CEO-but not on Appellate
authorities – to clarify & ensure uniformity.
 General…
Sec. 37 C: Service of decisions, orders, summons, notices, etc.
(a) By tendering decision, orders, summons or notices summons or
sending it by RPAD or speed post or courier approved by CBEC
(b) If (a) is not possible, by affixing a copy of the same to some
conspicuous part of the factory or warehouse or other place of
business, residence, etc.
(c) If (a) & (b) are not possible by affixing a copy on the notice board
of the office of the authority who passed or issued such
order/decision/summons.
 
Sec.37D -Rounding of duty, etc. < 50 paise - ignore; =/> 50 paise –
increase to rupee.
 General…
Rule 31: Power to issue supplementary instructions--
- the Board or Principal Chief Commissioner/Chief Commissioner or Principal
Commissioner/Commissioner -
 -- may issue written instructions providing for any incidental or
supplemental matters consistent with the provisions of the Act and the rules.

Manual of Supplementary instructions, 2005 -u/Rule 31 of CER

= standing instructions.
- applicable through out India;
- any temporary deviation shall be with prior approval of Commr.- who will
obtain Board’s sanction for such deviation.
THANK YOU