Needed devolving in excise rules

Last week, the Union government decentralised the power to impose restrictions on certain facilities when a manufacturer or a first-stage or second-stage dealer or an exporter commits certain types of offences. Earlier, only the member (central excise) of the Central Board of Excise and Customs (CBEC) could impose the restrictions. Now, that power has been given to chief commissioners of central excise.

Rule 12CC of the Central Excise Rules, 2002, and Rule 12AA of the Cenvat Credit Rules, 2004, were first introduced on December 30, 2006, empowering an officer authorised by CBEC to impose restrictions on defaulters. Specified as serious offences were removal of goods without the cover of an invoice and without payment of duty, without declaring the correct value for payment of duty, and where a portion of sale price, in excess of invoice price, is received by the assessee or on his behalf but not accounted for in the books of account. Also, taking of Cenvat credit without the receipt of goods specified in the document based on which the said credit has been taken, taking it on invoices or other documents apparently not genuine. Plus, issue of excise duty invoice without delivery of goods specified in the said invoice and claiming of refund or rebate, based on the said invoice or other documents which a person has reason to believe as not genuine.

The deterrent was to withdraw the facility of monthly payment of duties, making it compulsory for the assessee to pay excise duty for each consignment at the time of removal of goods. And, to withdraw the facility for payment of duty by utilisation of Cenvat credit. The restrictions could be imposed only in cases where the duty or Cenvat credit involved in the specified offences exceeded Rs 10 lakh. Time limits for the restrictions to be in force were also laid down.

These restrictions were challenged in courts on technical grounds. In the case of Dhariyal Chemicals [2009 (234) ELT 0208 (Guj.)], the Gujarat high court rejected a challenge to the Constitutional validity of the rules and the notifications. However, in the case of Aryn Ispat and Power Pvt Ltd [2012 (281) ELT 15 (Ori.), the Odisha high court held the Rules 12CC of the CE Rules, 2002, and Rule 12AA of the CC Rules, 2004, notified in the year 2006, were without any authority of law. The government's appeal against that judgment was admitted by the Supreme Court [2013 (295) ELT A22 (SC)]. After the Gujarat HC judgement but before the Odisha one, the government got the necessary amendments made through the Finance Act, 2010, and issued fresh notifications on March 12, 2012.

The recent amendment placing the powers to impose restrictions on facilities in the case of specified offences in the hands of chief commissioners will facilitate personal hearings closer to where the assessee is located and help in quicker decisions. The defaults noticed at the ground level and recommendations to impose the restrictions need not be taken right up to the CBEC. Similarly, an assessee need not go to Delhi to appear in personal hearings to only state one's case.

email: tncr@sify.com