CENTRAL EXCISE RULES, 2017 – PART II

[Mr. M. GOVINDARAJAN]

Warehousing provisions

Rule 16 provides that the Central Government may, by notification, extend the facility of removal of any excisable goods from the factory of production to a warehouse or from one warehouse to another warehouse without payment of duty.  This facility shall be available subject to such conditions, including penalty and interest, limitations, including limitation with respect to the period for which the goods may remain in the warehouse and safeguards and procedure, including in the matters relating to dispatch, movement, receipt, accountal and disposal of such goods, as may be specified by the Board.  The responsibility for payment of duty on the goods that are removed from the factory of production to a warehouse or from one warehouse to another warehouse shall be upon the consignee.   If the goods dispatched for warehousing or re-warehousing are not received in the warehouse, the responsibility for payment of duty shall be upon the consignor.

Remission of duty

Rule 17 provides for remission of duty.  If it is shown to the satisfaction of the Principal Commissioner or Commissioner, that goods have been lost or destroyed by natural causes or by unavoidable accident or are claimed by the manufacturer as unfit for consumption or for marketing, at any time before removal, he may remit the duty payable on such goods, subject to such conditions as may be imposed by him by order in writing.

• Where such duty does not exceed ₹ 10,000/-, the power is vested on the Superintendent of Central Excise;
• Where such duty exceeds ₹ 10,000/- but does not exceed ₹ 1 lakh, the power is vested on the Assistant Commissioner of Deputy Commissioner;
• Where such duty exceeds ₹ 1 lakh but does not exceed ₹ 5 lakhs, the power is vested on Joint Commissioner or Additional Commissioner.

The authority concerned shall, within a period of three months from the date of receipt of an application decide the remission of duty.    This period may be extended by an authority next higher than the authority before whom the application for remission of duty is pending, for a further period not exceeding six months, if sufficient cause is shown.

Rebate of duty

Rule 18 provides that where any goods are exported, the Central Government may, by notification, grant rebate of duty paid on such excisable goods or duty paid on materials used in the manufacture or processing of such goods.  The rebate shall be subject to such conditions or limitations, if any, and the fulfillment of such procedure as may be specified in the notifications.

Export without payment of duty

Rule 19 provides that any excisable goods may be exported without payment of duty from a factory of the producer or the manufacturer or the warehouse or any other premises, as may be approved by the Principal Commissioner or Commissioner.  Any material may be removed without payment of duty from a factory of the producer or the manufacturer or the warehouse or any other premises, for use in the manufacture or processing of goods which are exported, as may be approved by the Principal Commissioner or Commissioner.  The export shall be subject to such conditions, safeguards and procedure as may be specified in the said notification by the Board.

Removal of goods

In this Rules the following types of removal of goods have been provided as detailed below-

• Removal of goods for job work etc., - Rule 20;
• Special procedure for removal of semi-finished goods for certain purposes – Rule 21;
• Special procedure forremoval of excisable goods for carrying out certain processes;
• Removal of goods by a 100% EOU for Domestic Tariff Area;

Removal of goods for job work etc.,

Any inputs received in a factory may be removed as such or after being partially processed to a job worker for further-

• processing;

• testing;

• re-conditioning; or

• any other purpose

subject to the fulfillment of conditions specified in this behalf by the Commissioner of Central Excise having jurisdiction.

Removal of semi-finished goods for certain purposes

The Principal Commissioner of Central Excise or Commissioner of Central Excise may be by special order and subject to conditions as maybe specified by him permit a manufacturer to remove excisable goods which are in the nature of semi-finished goods, for carrying out certain manufacturing processes, to some other premises and to bring back such goods to his factory, without payment of duty or to some other registered premises and allow these goods to be removed on payment of duty or without payment of duty for export from such other registered premises.

Removal of excisable goods for carrying out certain processes

The Principal Commissioner of Central Excise or Commissioner of Central Excise, by special order and subject to such conditions as may be specified by him, may permit a manufacturer to remove excisable goods manufactured in his factory, without payment of duty, for carrying out tests or any other process not amounting to manufacture, to any other premises, whether or not registered and after carrying out such tests or any other process may allow-

• bringing back such goods to the said factory without payment of duty, for subsequent clearance for home consumption or export; or
• removal of such goods from the said other premises, for home consumption on payment of duty leviable thereon or without payment of duty for export.

This rule shall not apply to the goods known as ‘prototypes’ which are sent out for trial or development test.

Removal of goods by a 100% EoU for DTA

The removal from 100% EoU to DTA shall be made under an invoice by following the procedure in Rule 11 (which provides for the goods to be removed on invoice).  The duty leviable on such goods shall be paid by utilizing the CENVAT credit or by crediting the duty payable to the amount of the Central Government in the manner specified in Rule 8.

The unit is to maintain appropriate account relating to production, description of goods, quantity removed and the duty paid.  The unit shall submit a monthly return in the form specified electronically within 10 days from the close of the month to which the return relates, in respect of excisable goods manufactured in, and receipt of inputs and capital goods in the Unit.  The CBE&C may, by an order extend the period by such as deemed necessary under the circumstances of special nature to be specified therein.

The proper officer may scrutinize the correctness of the duty assessed by the assessee on the goods removed, on the basis of information contained in the return and after such further enquiry as he may consider necessary.  Every assessee shall make available to the proper officer all the documents and records for verification as and when required by such officer.

If the return is submitted after the due date, the assessee shall pay an amount calculated @ ₹ 100/- per day subject to a maximum of ₹ 20,000/- for the period of delay in submission of each return.  An assessee, who has filed a return within the date specified, may submit a revised return by the end of the calendar month in which the original return is filed.

Powers of Officers

The following powers are given to the Officers by these Rules as detailed below-

• Access to a registered premises – Rule 24;
• Power to stop and search – Rule 25;
• Power to detain or seize goods – Rule 26.

Access to a registered premises

The Principal Commissioner or Commissioner may authorize an officer to have access to any premises registered for the purpose  of carrying out any scrutiny, verification and checks as maybe necessary to safeguard the interest of revenue.

Every assessee, an importer who issues an invoice on which CENVAT credit can be taken, first stage and second stage dealer shall furnish the officer concerned a list in duplicate, of all the records prepared and maintained for accounting of transaction in regard to receipt, purchase, manufacture, storages, sales or delivery of the goods including inputs and all the financial records and statements.  They should also on demand make available to the officer concerned or the audit party deputy by the Principal Commissioner or Commissioner, or the Comptroller and Auditor General of India, or a cost accountant or a chartered accountant nominated under section 14A or section14AA of the Act, the following-

• the records maintained or prepared by him;
• the cost audit reports, if any, under section148 of the Companies Act, 2013; and
• the income tax audit report, if any, under section 44AB of the Income Tax Act, 1961

for the scrutiny within the time specified.

Power to stop and search

Rule 25 provides that any Central Excise Officer may search any conveyance carrying excisable goods in respect of which he has reason to believe that the goods are being carried with the intention of evading the duty.

Power to detain or seize goods

Rule 26 provides that if a Central Excise Officer has reason to believe that any goods, which are liable to excise duty but no duty has been paid thereon or the said goods were removed with the intention of evading the duty payable thereon, the Central Excise Officer may detain or seize such goods.

Rule 27 provides that the books of accounts or other documents seized by the Central Excise Officer or produced by an assessee or any other person, which have not been relied on for the issue of notice under the Act or the rules made there under, shall be returned within 30 days of the issue of the notice or within 30 days from the date of expiry of the period for issue of such notice.  The Principal Commissioner or Commissioner may order for the retention of such books of accounts and or documents for reasons to be recorded in writing.  The Central Excise Officer shall intimate to the assessee or such person about such retention.

Confiscation and penalty

Rule 28 provides that if any producer, manufacturer, registered person of a warehouse, or an importer who issues an invoice on which CENVAT credit can be taken, or a registered dealer-

• removes any excisable goods in contravention of any of the provisions of these rules or the notifications issued under these rules; or
• does not account for any excisable goods produced or manufactured or stored by him; or
• engages in the manufacture, production or storage of any excisable goods without having applied for the registration certificate required under section 6 of the Act; or
• contravenes any of the provisions of these rules or notifications issued under these rules with intent to evade payment of duty

then, all such goods are liable to confiscation.  The concerned person shall be liable to a penalty not exceeding the duty on the excisable goods in respect of which any contravention has been committed or ₹ 5000/- whichever is greater.  An order shall be issued by the Central Excise Officer following the principles of natural justice.

Penalty for certain offences

Rule 29 provides that any person who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with any excisable goods which he knows or has reason to believe are liable to confiscation under the Act or these rules, shall be liable to a penalty not exceeding the duty on such goods or ₹ 2,500/- whichever is higher.

Where any proceeding for the person liable to pay duty have been concluded under Section 11AC(1)(a) or (d) of the Act in respect of duty, interest and penalty, all proceedings in respect of penalty against other persons, if any, in the said proceedings shall also be deemed to be concluded.

Any person, who issues-

• an excise duty invoice without delivery of the goods specified therein or abets in making such invoice; or
• any other document or abets in making such document, on the basis of which the user of said invoice or document is likely to take or has taken any ineligible benefit under the Act or the rules made there under like claiming of CENVAT credit under CENVAT Credit Rules, 2017 or refund, shall be liable to a penalty not exceeding the amount of such benefit or ₹ 5,000/- whoever is higher.

General Penalty

Rule 30 provides that a breach of these rules shall, where on other penalty is provided in the Act, be punishable with a penalty which may extend to ₹ 5,000/- and with confiscation of the goods in respect of which the offence is committed.

Confiscated property to vest in Central Government

Rule 31 provides that when any goods are confiscated such thing shall there upon vest in the Central Government.  The Central Excise Officer adjudging confiscation shall taken and hold possession of the things confiscated, and every officer of Police, on the requisition of such Central Excise Officer, shall assistant him in taking and holding such possession.

Disposal of confiscated goods

Rule 32 provides that confiscated goods in respect of which the option of paying a fine in lieu of confiscation has not been exercised shall be sold, destroyed or otherwise disposed of in such manner as the Principal Commissioner or Commissioner may direct.

Storage charges

Rule 33 provides that if the owner of the goods, the confiscation of which has been adjudged, exercises his option to pay fine in lieu of confiscation, he may be required to pay such storage charges as may be determined by the adjudicating officer.

Power of Board

Rule 34 gives powers to the Board to issue written instructions providing any incidental or supplemental matters, consistent with the provisions of the Act and these rules.

Transititional provisions

Rule 35 provides that any notification, circular, instruction, standing order, trade notice or other order issued under the Central Excise Rules, 2001 or 2002 by the Central Government, the Board, the Principal Chief Commissioner or Chief Commissioner  or Principal Commissioner or Commissioner and in force at the commencement of these rules, shall, to the extent it is relevant and consistent with these rules, be deemed to be valid under the corresponding provisions of these Rules.