Jan 252013
 

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Central Excise – Guidelines for launching prosecution under the Central Excise & Salt Act, 1944 – Central Excise – 15/90-CX.6 – Dated:- 9-8-1990 – Central Excise – Guidelines for launching prosecution under the Central Excise & Salt Act, 1944 Circular No. 15/90-CX.6 Dated 9-8-1990 [From F.No. 218/7/89-CX.6] Government of India Ministry of Finance (Department of Revenue) Central Board of Excise & Customs, New Delhi Subject : Central Excise – Guidelines for launching prosecution under the Central Excise & Salt Act, 1944. I am directed to refer to undermentioned letters on the subject. It has been decided to modity the guidelines for prosecution in the light of recent experience : (i) No. 208/6-M/77-CX.6 dated 26th July, 1980 (ii) No. 208/10/85/CX.6 dated 19-6-1985 (iii) No. 208/20/85 CX.6 dated 15-10-85 (iv) No. 208/19/86 CX.6 dated 30-9-1986 2. The guidelines so far issued are not being revised and incorporated in this letter. These are as unders- (i) Prosecution should be launched with the final approval of the Principal Collector after the case has been carefully examined by the Collector in the light of the guidelines. (ii) Prosecution should not be launched in cases of technical nature, or where the additional claim of duty is based totally on a difference of interpretation of law. Before launching any prosecution, it is necessary that the department should have evidence to prove that the person, company or individual had guilty knowledge of the offence, or had fraudulent intention to commit the offence, or in any manner possessed mens rea (mental element) which would indicate his guilt. It follows, therefore, that in the case of public limited companies, prosecution should not be launched indiscriminately against all the Directors of the company but it should be resticted to only against such of the Director like the Managing Director, Director in charge of Marketing and Sales, Director (Finance) and other executives who are in charge of day-to-day operations of the factory. The intention should be to restrict the prosecution only to those who have taken active part in committing the duty evasion or connived at it. For this purpose, the Collectors should go through the case file and satisfy themselves that only those Chairman/Managing Directors/Directors/Partners/Executives/Officials against whom reasonable evidence exists of their involvement in duty evasion, should be proceeded against while launching the prosecution. For example , Nominee Directors of financial institutions, who are not concerned with day-to-day matters, should not be prosecuted unless there is very definite evidence to the contrary. Prosecution should be launched only against those Directors/Partners/Officials etc. who are found to have guilty knowledge, fraudulent intention or mens rea necessary to bind them to criminal liability. (iii) In order to avoid prosecution in minor cases, a monetary limit of Rs. 10,000/- was prescribed in the instructions contained in Board s letter F.No. 208/6/M-77- CX.6 dated 26-7-1980. Based on experience, and in order not to fritter the limited man-power and time of the Department on too many petty cases, it has now been decided to enhance this limit to Rs. 1 lakh. But in the case of habitual offenders, the total amount of duty involved in various offences may be taken into account while deciding whether prosecution is called for. Moreover, if there is evidence to show that the person or the company has been systematically engaged in evasion over a period of time and evidence to prove malafides is available, prosecution should be considered irrespective of the monetary limit. (iv) One of the important considerations for deciding whether prosecution should be launched is the availablity of adequate evidence. Prosecution should be launched against top management when there is adequate evidence/material to show their involvement in the offence. (v) Persons liable to prosecution should not normally be arrested unless their immediate arrest is necessary. Arrest should be made with the approval of the Assistant Collector or the senior most officer available. Cases of arrest should be reported at the earliest opportunity to the Collector, who will consider whether the case is a fit one for prosecution. (vi) Decision on prosecution should be taken immediately on completion of the adjudication proceedings. (vii) Prosecution should normally be launched immediately after adjudication has been completed. However, if the party deliberately delays completion of adjudication proceedings prosecution may be launched even during the pendency of the adjudication proceedings if it is apprehended that undue delay would weaken the department s case. (viii) Prosecution should not be kept in abeyance on the ground that the party has gone in appeal/revision. However, in order to ensure that the proceedings in appeal/revision are not unduly delayed because the case records are required for purpose of prosecution, a parallel file containing copies of the essential documents relating to adjudication should be maintained. It is necessary to reiterate that in order to avoid delays, Collector should indicate at the time of passing the adjudication order itself whether he considers the case to be fit for prosecution so that it should be further processed for being sent to Principal Collector for sanction. 3. Procedure for prosecution: (i) Consequent upon the creation of the post of Principal Collector, the procedure for sanctioning of the prosecution is being modified. In all such cases where the Collector of Central Excise incharge of judicial work is satisfied that prosecution should be launched, an investigation report for the purpose should be launched, an investigation report for the purpose of launchi………………

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