CBEC Advisory to follow prescribed law-Instructions for collection of duty

CBEC Advisory to follow prescribed law-Instructions for collection of duty in view of Delhi High Court taking serious note of illegal practice of collecing undated cheques. 

CBEC Advisory

Recently, the Delhi High Court took a serious note of collection of undated cheques by Anti Evasion Wing of the Excise Department. The undated cheques were allegedly colected from the assessee company towards payment of short payment of duty.

The Department could not show any provision in Central Excise Act 1944 (CE Act) or the Rules made thereunder  or any circular or notification that permitted the officers of the Department to collect „undated cheques‟ constituting the differential duty liability and in particular authorising officers to collect such differential duty liability during the process of a visit/search or survey.

The Hon’ble High Court  had observed that this illegal practice adopted by the Anti-Evasion Department of Central Excise required a deeper investigation. The Court believed that had not the Petitioner approached the Court, such practice would not have come to the light.

The Hon’ble Court had opined that this practice was perhaps being adopted in a number of instances which were yet to come to the notice of the Court. Accordingly, the Commissioner of Central Excise, Delhi-II was directed to institute an enquiry to ascertain which of the officers were involved in this illegal exercise. He was also directed to seek explanation from them as to how they proceeded to collect undated cheques in the manner indicated above and that too without any authorisation to do so under the CE Act/rules or under any circular/notification etc.

The High Court also directed that copy of its judgment be also sent to the Central Vigilance Commissioner (CVC) in view of the seriousness of the issue.

Now, in view of the above, the CBEC has issued the following advisory for following only the prescribed provisions of law and Board’s Instructions in the matter of collection of Duty.

Government of India
Department of Revenue, Ministry of Finance
Directorate General of Vigilance, CBEC
Hotel Samrat, Kautilya Marg, Chanakyapuri, New Delhi – 110 021

F.No. V/598/01/2017/8698

Dated: 7thSeptember, 2017

Subject: Advisory for following the prescribed provisions of law and Board’s Instructions in the matter of collection of Duty – reg.

1. Recently, in the case of a manufacturer of Mobile Phone Batteries, LED, Charger, etc. in Delhi, the officers of Anti Evasion Branch of erstwhile Central Excise Delhi-II Commissionerate, with the approval of competent authority, had visited the premises of the assesse. On scrutiny of records of the assessee it was found that the assessee has not paid/discharged Central Excise duty as was due. On being explained about the conditions prescribed in the relevant exemption Notification, the assessee admitted that they were not eligible to avail duty exemption under the said Notification and agreed to pay the differential The assessee handed over five un-dated cheques for the same and verbally informed the Central Excise officers that they did not have sufficient balance in their bank account and assured that as and when they have sufficient balance they will come and fill the date on the cheques.

1.1 However, the assessee filed a Writ Petition (C) No. 3070/2017 in the Delhi High Court pleading inter alia that the Department may be directed to not encash the cheques. Delhi High Court in its Order dated 30.05.2017 directed CVC (i) to examine the report dated 25.05.2017 of the Superintendent (Vig) (in compliance with the Court’s earlier Order dated 15.05.2017) whether it discloses the commission of an offence which may be punishable under the Prevention of Corruption Act, 1988 and (ii) to place before it a note on what possible regulatory framework can be put in place to strengthen the vigilance system in the Ministries and Departments of Government concerned with collection of indirect taxes, with particular reference to excise duty, customs duty and service tax.

1.2 CVC has vide their O.M. No. 017/CEX/016/352631 dated 28.07.2017 advised CBEC to issue suitable advisory to the officers concerned to scrupulously follow the laid down procedure and not to deviate.

2. The concerned wings of the CBEC have from time to time issued instructions/ directions to all officers and staff in CBEC in the matter of collection of duty/tax.

3. In this regard all concerned in CBEC are advised to strictly follow the legal provisions and instructions/directions issued from time to time by the Board and not to deviate from the laid down procedure. 

This issues with the approval of Member (Admn), CBEC.

( Raj Kumar Barthwal )
DG (Vig) & CVO, CBEC

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