Central Excise Demands

Gopi Donthireddy

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AGENDA
 SOURCES OF DEMANDS

 LAW

 EXAMPLES
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SOURCES OF DEMANDS
 AUDIT

 ANTI-EVASION AND INTELLIGENCE

 REGULAR ER-SCRUTINY

 ERRONEOUS REFUNDS

 PROTECTIVE DEMANDS

 PERIODICAL SCNs

 OTHERS
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AUDIT
 UNDERSTANDING THE AUDIT PROCESS

 IMPACT OF FORMATION OF AUDIT

COMMISSIONERATES
 FUTURE IS AUDIT

 EXAMPLES
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LAW
 SECTION 11A

 SECTION 11AA

 SECTION 11AC

 OTHER PENALTY CLAUSES

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SECTION 11A
 Title: Recovery of duties not levied or not paid or short-
levied or short-paid or erroneously refunded
 11A(1). No Fraud, collusion etc. Within one year of
Relevant date
 11A(4). Fraud, collusion etc. Within 5 years of Relevant
date
 11A(5). In Course of Audit. After SCN, Penalty is 50%.
Before SCN, Penalty is max of 25%
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SECTION 11A …
 11A(10): Opportunity to be Heard. PNJ.

 11A(11): Time limits for passing OIOs

 11A(14): Default Interest Clause

 PERIODICAL SCN
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RELEVANT DATE
 STATUTORY DATE OF RETURN WHEN NO RETURN
IS FILED
 DATE OF FILING OF RETURN

 DATE OF FINAL ASSESSMENT

 DATE OF ERRONEOUS REFUND

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INTEREST: SECTION 11AA

 Interest, at such rate not below ten per cent and not
exceeding thirty-six per cent per annum, as the Central
Government may, by notification in the Official Gazette,
fix, shall be paid in terms of section 11A after the due date
by the person liable to pay duty and such interest shall be
calculated from the date on which such duty becomes due
up to the date of actual payment of the amount due.
 18%. IN ST, WE HAVE STAGGERED INTEREST
RATES
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PENALTY: SECTION 11AC

 1(a) – 100% (11A(4) Cases)

 1(b) – 50% (Audit Cases – 11A(5))

 1(c) – 25% (Audit Cases where payment made within 30

days of OIO )
 Before SCN – Voluntary payment -> 1% per month. Upto
max of 25%
 Penalty for 11A(1)? Goto Rule 25 of C.Ex Rules. Penalty
here is upto 100%.
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ADJUDICATION LIMITS

S.NO LIMIT (DUTY ADJ. AUTHORITY

INVOLVED)
1 UPTO 1 LAKH SUPDT *
2 1 LAKH TO 5 AC
LAKH
3 5 LAKH TO 50 JC/ADC
LAKH
4 ABOVE 50 LAKH COMMR
* EXCLUDING CASES INVOLVING DETERMINATION OF RATE OF DUTY OR
VALUATION AND CASES INVOLVING EXTENDED PERIOD OF LIMITATION

##EVEN IN CASE OF ERRONEOUS REFUNDS !!!

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STRUCTURE OF AN SCN
 FACTS OF THE CASE

 VIOLATION WRT LAW

 SHOW CAUSE
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STRUCTURE OF OIO
 FACTS OF CASE

 VIOLATION WRT LAW

 SHOW CAUSE

 DISCUSSION AND FINDINGS

 FINAL ORDER
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EXAMPLE
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APPEALS : OVERVIEW

AC COMMR(A) CESTAT HC SC

COMMR CESTAT HC SC
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CONCEPT OF CALLBOOK
 The Call book cases are those cases, which can not be adjudicated
immediately due to certain specified reasons and adjudication is to
be kept in abeyance by transferring such cases to call book.
 The Central Board of Excise and Customs (Board), vide Circular
No. 162/73/95-CX.3, dated 14-12-1995, specified the following
categories of cases which can be transferred to call book:-
 Cases in which the Department has gone in appeal to the
appropriate authority.
Explanation: This category refers to cases wherein on identical issue, the
Department has filed before higher appellate authority against the order
passed by the lower authority, which was against the REVENUE.
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CONCEPT OF CALLBOOK
 Cases where audit objections are contested.

Wherever the audit objection is not accepted by the Department,

then in its response, the Department is required to communicate
the grounds / arguments to the C & AG Office. However, in such
cases, protective SCN are issued so as to avoid the duty demand
getting time barred and SCN is transferred to call book.
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SCN/OIO CAVEATS
 PERIODICAL SCNs CANNOT ALLEGE SUPRESSION

 BE CAREFUL WHILE INVOKING SUPPRESSION

 DON’T GO BEYOND SCN IN ANY RESPECT

 ADJUDICATE WITHIN ONE YEAR. BETTER 6 MONTHS

 FOLLOW PNJ WHILE ADJUDICATING

 GIVE AT LEAST 3 OPPURTUNITIES FOR PERSONAL

HEARING
 DURING PH, WRITE DOWN THE PROCEEDINGS AND
GET IT SIGNED BY THE PARTY
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SCN/OIO CAVEATS
 SERVE THE SCN ASAP. HAS IMPACT ON APPEALS

 DON’T BACKDATE!!!!!

 DON’T BLINDLY CONFIRM. GO AGAINST THE

PRINCIPLE OF “CONFIRM ALL DEMANDS,
REJECT ALL REFUNDS”
 RELY ON EXCUS AND CASE LAWS!!!
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THANK YOU