Central Excise Act, 2000 - Section 11A proviso misused
Surrender K Singal
(Querist) 20 November 2010
This query is : Resolved
Inspite of general directions from CBEC and the concerned legal fora of the country to avoid petty avoidable litigation, field formations of Central Excise have been misusing proviso to section 11A to extend limitation of one year to five years JUST to harass even SSI units, not obliging the dictates / whims of such Divisional formations of CBEC;
What could be the escape route to save such SSI unit from the drill of (a)replying to the impugned time-barred Show Cause Notice (b) attending personal hearing (c) getting adjudication order demanding ill-thought of alleged short-levy (d) obtaining stay of recovery (e) persuing First Appeal and so on till getting obvious relief from CESTATribunal ?
C M Sharma
(Expert) 21 November 2010
If the issues are clear that extended period of time can not be invoked and this issue is being raised due to unworthy demands, then you may approach with all the papers to the Directore of Vigilance, New Delhi/ Mumbai / Chennai/ Kolkatta under CBEC with formal details of the issues involved and demands being raised that you are not meeting to the dictates / whims of such Divisional formations of CBEC.
On the Website of www.cbec.gov.in you would find such reference.
Alternatively, submit the documents called for under summons and let them issue the notice. If the notice is self contradictory then raise the issue with Dte of Vigilance with regard to back ground for issuance of notice.
Alternatively still, approach High Court against summons seeking it to quashed and seek cost.
V.Mahadevan
(Expert) 21 November 2010
It is legitimate exercise of power on the part of Revenue to invoke section 11A to secure realisation of Government dues.
Nonetheless,it remains an unpleasant matter of fact reality at the ground level that lower formations, more often than not, take recourse to alleging suppresion, etc. and invoke extended period of limitation without merits. This has become a device to take shelter and umberage under the said section to save their skin but attendant with heavy burden on the SSI units in terms long drawn adjudication processes,time and costs of resolution of SCNs to their logical end.
Measures such as fixation of monetary limits for raising demands,an advance assessment of the need and justification for issue of SCNs based on an indepth reference to judicial pronouncements and precedents by an independent legal cell within the Division and a system ennabling upgradation of knowledge and application skils of staff should be condusive to the interests of Revenue and the tax payers.
The interface between the tax payer and tax collector would then be marked by a cordial win win situation.
ajraval
(Expert) 23 November 2010
The Proviso to Section 11A of the Act postulates that where any duty of excise has not been levied or paid, or has been short-levied or short-paid, or erroneously refunded, by reason of fraud, collusion or wil-ful mis-statement or suppression of facts or contravention of any of the provisions of the Act, or under the rules made thereunder, with intent to evade payment of duty by such person, the limitation period of five years is applicable.
In the instant case, what is necessary is to show that there was no suppression of facts. If the department's knowledge is established, it helps.
If it is argued before the Tribunal and show that there was no fraud, or collusion or wilful mis-statement, the Tribunal considers this explanation and has ordered to charge duty for one year in most of the cases.
Surrender K Singal
(Querist) 23 November 2010
SC judgements in Padmini Products and Chemphar Drugs having been accepted by CBEC vide Circular No. 312/28/97-CX dated 22.04.97 but is being overlooked by Divisional formations only to harass and let the matter hang for SSI Assessee to suffer in litigation ?
What could be the escape route to save such SSI Assessee to avoid being entangled in such worthless litigation ... since reached CESTAT level for stay of disputed demand including 100% penalty that too without SCN?
