For Departmental use only

I,.

ADJUDICATIONMANUAL

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(FOURTH EDITION)

(Corrected up to 31.3.88)

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PREFACE

This is the fourth edition of the Adjudication Manual. The fIrst three editions were broughtout in 1962, 1967 and 1976 respectively. The Departmental officers have long been feeling thenecessity of this manual and the present edition fulfils their long cherished demand.

\

The manual has been corrected and updated by the Directorate General of Inspection,Customs & Excise upto 31.3.88. It is hoped that the officers of the Customs and Central ExciseDepartment will find the publication useful.

Any errors and omissions, if noticed may kindly be brought to the notice of this Directorate.

Suggestions for its improvement with regard to its contents and getup are welcome. /

B.P. VERMADIREcrOR PUBLICATIONS

New Delhi, the 30th Oct., t 988.

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TABLE OF CONTENTS

CHAPTER-I

INTRODUCTORY

Subject

Scope of instructionsExpenditious disposal of cases of offences under the Act and RulesProsecutions

Time limit for taking up prosecutions and adjudicationsTime limit for an appeal against acquittalProcedure when prosecutions not orderedRemission of duty - Passing of appealable ordersProcedure for conduct of legal cases in civil courtsPendency of departmental proceddings till the court case is overTime scheduie for dealing with suit notices/writ petitions etc.

CHAPTER -II

SElzrRE OF GOODS

Power to seize

Legality of detention of a vessel for carrying out searches for smuggledgoods suspected to be on boardThings seized, how dealt withGoods detained, how dealt with

DispGsal of perishable goods seized for breach of Customs Act, CentralExcises and Salt .\ct and Central Excise Rules.

Payment of rent for storage of seized excisable goodsRecovery ofS torage charges of seized or confIscated goods from the ownerRecovery of wharfage under the Customs ActDisposal of confIscated goodsWho may conduct an auctionNotice of auctionConditions of auction

Duty on confIscated goodsReserve price of confIscated goodsWho may accept the bidSale by private treatyDeletedDeleted

Case of owner bidding at auctionRent due to public carrierDeleted

Disposal of goods seized but not confiscatedSeized goods lying in the custody of third partyDeleted

Disposal of unclaimed goodsProcedure when excisable goods are seized by police offIcers

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SubjectPage No.

30.

Need for separate adjudication order in cases involving more than one24

transaction. 31.Adjudication of offences to which different rules are applicable24

31AAdjudication of one snd the same case twice 24

32.Determination of MENSREA in departmental adjudications.24

32AAdjudications by the detecting officers 24

32BConfiscation of goods. 24

33.Time schedule for expenditious adjudication of offences and seizure cases.25

34.Form of adjudication order in Central Excise cases. 25

35.Demand for Central Excise duty on confiscated goods not to be included26

in the body of the adjudication order 36.Offences punishable under the Central Excises and Salt Act, 1944 not27

subject to departmental adjudication 36A

Distinction between confiscation under the Central Excise Rules and27

forfeiture by a court under section 10 of the Central Excises and Salt Act37.Whether warnings are punishments under section 33 of the Central Excises27

and Salt Act, 1944 38.Quoting of mles and method of calculation of differential duty in demand27

notice. 39.Quoting of number and date of Board's orders in correspondence with the27

trade 40.Observance of principle of natural justice in departmental adjudications.28

40ARecommendations by the office assistants orother subordinates for the final30

decisions of the cases 40BPassing of conditional orders in adjudi~ation and appeals 30

41.Determination of competent adjudicating authority in cases where the30

excisable goods are non-existent, on the question whether value of such goods or magnitude of offence should be the criterion.42.Whether on transfer of the officer who recorded decision on the file his30

successor can issue the formal ocoer of adjudication without rehearing the party'43.Provisional release of things seized pending adjudication on deposit of31

security - execution of bond. 44.Power of adjudication of Central Excise Officers 31

45.Restrictions in the power of adjudication of Central Excise Officers.32

46.Prope,officer under Rule (9) for sanctioning sugar rebate and instructions34

regarding refund under section IIC 47.The despatch of adjudication order by registered post acknowledgement34

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47A Depatr:h of order to counselor advocate 35

47BSending of copies of adjudication orders etc. to the company law Board.35

48.

Demand for duty on losses occurring in warehouses '35

49.

The rate of duty in case of clandestine removal 35

49ARelease of confiscated goods beyond the time limit prescribed in the order35

in originaVorder in appeal - clarification regarding 50.

Issue of demand notice under Rul~ 160 of th(; Central Excise Rules, 194435

51.

Whethernon observance by the trade or licensee of supplementary instruc-36

tionsissued under Rule 233 of Central Excise Rules is punishable52.

Publication of the orders and notifications issued under Rule 233 of the36

c.entral Excise Rules in tt,e Gazette of India 52APublication of names of off~nders in the Gazette. 36

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66.67.

67A

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69.70.

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72.73.

73A

73B73C73D

73E

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Subject

Date frOm which notification and orders issued under Central Excise Rulesetc. take effect

Liability of carriers of excisable goods to render assistance to CentralExcise Officer under Rule 227 of the Central Excise Rules, 1944

Competent authority for adjudication of an offence committed in oneCoUectorate but seizure of goods made in another CollectorateOffences of licensees

Enforcement of orders of adjudication

CHAPTER-VI

CUSTOMS

Provisional release of seized vehicles pending adjudication on deposit ofsecurity - execution of bond

The cases against diplomatic and consular officers of foreign countries inIndia, how to be dealt withDeleted

Scale ofimposition of fInes and penalties in case of contravention of importtrade control

Permission for reshipment within specified period of confiscated goods

Adjudication of case~ of gold smuggling in the form of crude jcwllery.Procedure in respect of seizure of jeweUery for pri'..cious stones, currencynotes, hundis and other securities etc. attempted to be exported.Realisation of value and penal action in cases of export of hundis andcheques in contravention of Foreign Exchange Regulations' Act.

Imposition of penalties etc. in cases involving ul1authorised export ofIndian currency.

Import Trade Coetrol Regulation - unauthorised imports - impusition offines in lieu of confiscation

Unlawful import of non-dutiable and non-restricted but unclaimed goodsProcedure for adjudication of offences under Drugs Act andRules.

Prohibitions and restrictions under NDPS Act, 1985 and Rules made

thereunder regarding Karcotic Drugs and Psychotropic substancesDeletedDeleted

Citing of proper authority in the adjudication order where goods areabsolutely confiscatedWhether same goods can be confiscated twice for misdeclaration of valueand contravention of Import Trade Control Regulations.Deleted

Imposition or enhancement of personal penalty in re-adjudication casesunder section 122 of Customs Act, 1962.

Onus of proof that goods are smuggled or imported illegally on CustomsDepartmentEnhancement of adj uru cation powers of Deputy Collectors etc.Enhancement of adjudication powers of Deputy Collector of CustomsOrders in appeal passed by the Collector Appeals under section 128A(3) ofthe Customs Act, 1962 and the correspOnding provision of Central ExciseAct,1944

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Non-levy of pe!"alty in lieu of duty on short lended goodsImport of dry fruits - instructions contained in Board's letter F.No. 493/126186-Cus.VI dated 22.12.1986. \

Clearance of personal and home computers under Baggage RulesAuction in lieu of confiscation -exerciseof discretion - recording of reason~Documents seized under the provision of section 110 of the Customs Act,1962 - providing c::'pies thereof to the responaents regarding -Irr.port of fire arms

Adjudication of baggage ca<>e

Monitoring of adiudication ca<>es - oeed for keeping a careful watch on

completion ofproceedinbs in REM (we) in FERSON.ElY'l iil a;l adjuolc.::tioncases - regarding -General

APPENDICES

Fonn of show cause MemoFornI of Show Cause NQti(~,

FormoP' c' .:;ister of prose;:.;t!:':lSForm of Notice - c:;x - explanatioC'Form of Notice for compo~ ."i,og r,r ,:,fff''''~~,Form of band for provisionsal release ohehicles seized under the Custom sActCopy of letter No. 11(I)/Cus-IIL'49 dated 13.2.50Form of undertaking vide proviso LO Rule 40 of the Drugs Rules, 1945Form of general letter of undertclcing for release of Drugs and Medicinesimported in contravention of the provisions of the Drugs Act, 1940 andRules thereunder

Form of undertaking for safe custody of seized goodsCopy of Ministry of Home Affairs Office Memorandum No. 4(1.1/57­Public I dated 13.1.1958

Time schedule for dealing with suit notices, writ petitions etc.Specimen copies of orders in respect of credit· instruments

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MANUAL OF DEPARTMENTAL INSTRUCTIONS ON ADJUDICATION

CHAPTER-I

INTRODUCTORY

1. Scope oflnstructions :- The instructions contained in this Manual are for the guidance of the Departmental .Officers competent to seize and to adjudicate offences under the Cen,tral Excises and Salt Act, 1944 and the Customs

Act, 1962. These instructions seek to achieve two objectives (a) that the principles of natural justice are fullyobserved in substance and in form, and (b) that an offender does not escape due to technical and/or procedural

defects. All officers charged with the function of seizure of goods and adjudication of offences under the Act andRules mentiond above must, therefore, follow these instructions so that any defects, wherever they exist, in the modeand procedure of adjudication are removed. These instructions are supplemental to, and should be read inconjunction with the Central Excises and Salt Act, 1944 a.'ld the rules framed thereunder and the Customs Act, 1962and should not be departed from withOl:1tstrong reasons to be recorded in writing by the officer concerned; any such

departure must be reported immediately by the officer concerned tohis)mmediate superior. The Collector of CentralExcise/Customs should ensure that any departure from these instructions should immediately be reported to the Board.

2. Expeditious Disposal of cases of oITences under the Act and Rules: - Offences under the Act and Rules citedin the precedingparagraph can be mainly divided into two parts (1) cases where offending goods exist and are availablefor seizure, and (2) cases where the goods are not. involved. Most of the cases under the Central Excise and SaltAct and Rules and the Customs Act, 1962 would be covered by item (1); some cases involving technical breach ofAct or Rules would be found to occur mostly relating to excisable goods e.g. breach of Rules 223 and 226. In casesinvolving seizure of goods the responsibility of the officers is much more than in the cases covered by item (2) forthe reason that any delay in the process of adjudication, is likely to cause deterioraLion of the goods pendingadjudication. If the goods deteriorate by lapse of time, not only the party concerned but the Government also standsto suffer if the party does not redeem them. Officers should. therefore, see that all offence cases, especially thosein which any goods have been seized or detained, are decided with utmost expedition.

2.A. Prosecutions:- (I) Prosecution under the Central Excises and Salt Actand imposition of penalties under theCentral Excise Rules should, as far as possible, be avoided in petty cases. All important contraventions of the Actshould be immediately reported through proper channel by the officer who fIrst detects them to his Asstt. Collectorfor orders. The Assistant Collector will institute such enquiries as maybe necessary and obtain the Collectors' sanctionfor prosecution where necessary.

(ii) Conduct of prosecution :- Prosecution under Section 9 and 10 of the Central Excises and Salt Act should

be launched with the approval of the Collector even though at present there is no statutory provision for this. TheCollector should apply his mind to the case and take the decision about launching the prosecution or otherwise. I

Prosecution should be taken up only under the following conditions and the general guidelines as enumerated belowshould be observed for launching prosecution in central excise offences :

(a) Prosecution should be ordered onl y when guilty knowledge/fraudulent intention/mensrea is presenL

(b) In order to avoid prosecution in minor cases, monetary limit has been prescribed. Prosecution should normallybe launched where the duty evad~ or auempted to be evaded is Rs.l O,(XX)/- or more. In the case ofhabitual offender, the total amount of duty involved in various offences should be taken into account whiledeciding whether the prosecution is called for.

The evidence is considered suffIcient to obtain the conviction. /

(d) Prosecution should be launched against top management when there is adequate evidence/material toshow their involvement in the case.

(e)

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(h)

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Persons liable to prosecution should not normally be arrested unless their immediate arrest is necessary.Arrest should be made with the approval of the Asslt. Collector or the senior most officer available. Cases

of arrest "aould be reported at the earliest opportunity to the Collector who will cOhsit: ~•.v, iaemer Ult' w~is fit (,fW for prosecution.

Decision on prosecution should Lc taken imme-diately on completion of the adjudication proceeding,'.In order toavoio de:ay, thecaseshouldbeprocessed even when the adjudication proceedmgsareinprog:-:.ss.

Li _..':on should normally be launched immediately after adjudication has been completw. However,

:; ":.t; party deliberately delays completion of adjudicauon proceed;ngs, proceedings may be.launch~ even

during the pendency of the adjudication pro.:eedings as undue delay would weaken the department's caSt..

Prosecution should not be kept in abeyance on the grcund that the party has gone in appeaVsocond appealHowever, in order to ensure that the proc.ee-dings in appeaVsecond apP"'-a1are not unduly delayed because thecase records are required for the purpose of prosecution, a parallel file conwning co;ies of the essentialdocuments relating to adjudication s;~Qulcth maintained.

Persons liable to prosewtion an: nOl required to ~ '1onnaJiy arrested unless t.'Jeir immediate ant'.:"

is necessary. A iarge number of cases are detected for removal of excisable goods clandestinely or

manufacture oi goods without obtaining thelicence3nd wiLhoutpaymentofccMralexciseduty. In such cases,

the guilty kn"" ;.xlge/fraudulcm intention is prima facie d:lCrc. In order ~o fiJVe ar! immed;('~ imp~(.and to make evasion of duty uneconomical and creating the fear of spoiling their image in the traCe anc s..."Cl.;;;

circle, the person concerned for removing the goods clandestinely or mar.ufacturing without licence a.·;d

clearing them 'vithou. paymem of duty should be arrested even before the issue of Sh0W cause notice. All

steps should be taken to finalise the in vestigation and adjudication of tIle case expeditiousl y a.•.·ld pros~ ution

of the guilty persons in. the court of law.

It has been observed thai there is considerable time lag between the day on which an offence case isadjudicated and the date on which prosecution is sanctioned and the complaint filed in the court of law.To overcome this time lag, where the Collector or the Additional Collector is the adjudicating authority, heshohld pass an order sanctioning prosecution against the accused only where there is evidence to indicateguilty knowledge/fraudulent intention! mens rea. In case where the adjudicating authority is DeputyCollector/Assistant Collector, the adjudication authority should send a proposal within a fortnight,after adjudication to the Collector. A register should be maintained in the Collectorate Headquarters inform as given in Appendix-II. This register should be reviewed by the Collector once in a month to ensurethat prosecutions are pursued vigorously.

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The above guidelines cannot cover all the situations. The Collectors will have to take the decision in a casein the light of the Government's general policy indicated above. In case, where the departure is made from the abovegeneral guidelines for sanctioning prosecution or otherwise, reasons for his decision should be recorded by theCollector in the relevant file.

The Asstt. Collector will appoint an officer to conduct the prosecution. But in importaDt cowtcases involvingcomplicated legal issues the Asstt. Coillector ,.with the previous permission of the Collector, may arrange to securethe help or advice of the local public prosecutor or of any other competent lawyer. Asstt. CoI1ectors should invariablywatch closely the progress of cases during all stages and render all necessary assistance to the subordinate officersto ensure that offenders do not escape conviction through any defect in the conduct of the case. When the case hasbeen completed the bill of the costs of legal advice should be submitted to the Collector for sanction.

(iii) Instructions as to conduct of cases in Criminal Courts:- No officer may disclose to persons outside theDepartment the name of an informant. Section 125 of the Indian Evidence Act Provides that the officer shall notbe compelled to say whence he got any information as to the commission of any offence against the pubHc revenue.

(iv) Officers should normally be in uniform while appearing before a court. They should address the courtin a straightforward and respectful manner. They may politely submit any point of law or fact to the Magistrate.

If officers are dissatisfied with any proc,eedings in Court, or if the Court does not order confiscation of the goods andother property in respect of which an offence has been committed, the fact should at once be reported to th~ Assu.

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Collector through proper channel

2.B Time-limit for taking \IP Prosecutions and Adjudications :- There is not time-limit for a departmenal

adjudication under Section 33 of the Central Excises and Salt Act or prosecution under Section 9 of the Act

2.C Time-limit for an appeal against acq uittal: The period of limitation for an appeal against acquittal is threemonths from thedate of order appealed against, if the appeal is filed by the State. If theprosecution was upon complaint

by the Department, an application has to be made to the High Court for special leave within 60 days of the date of theorder of acquittal.

In the circumstances, a copy of judgement in cases of acquittal should be obtained as quickly as possibleand submitted to the Board not later than a month from the date of order mentioning particularly in cases of acquittalas to what further action is proposed to be taken and whether or not the same has been initiated. In case an appealagainst the acquittal has to be preferred, the possible grounds thereof should also be stated.

2.D Procedure when prosecution not ordered:- When prosecution in respect of an offence is not ordered theimposition of a penaltyand the confiscation of the $toods must be considered. The offender should invariably begiven an opportunity to explain his case..

2.E Remission of duty - Passing of appealable orders :- In all casesoflosses involving remission of duty regularprocedure of settIement of dispute under Section 33 of CentralExcise and Salt Act, 1944 and in terms of the rules madeunder this Act should be followed. The application of the panies should not be disposed of as a representation anda proper order-in~riginal should be issued to enable the Collector (Appeals)/Government of India to consider theapplication on further appeal/revision. There iS,however, no objection if theorder is communicated l.1'1rougha formalletter where the request for remission is accep~ in f~ as the question of appeal/revision does not arise in such cases.

2.F Procedure for conduct of legal cases in Civil Courts: - (I) The time limit for filing an appeal against anorder of a Civil Court excluding the time taken for obtaining a copy of the judgment, is 30 days in case it lies toa district court. and 90 days in case it lies to the High Court It is not necessary to refer cases of the former categoryto the Board for seeking advice of the Ministry of Law. It is quite sufficient if a copy of the judgment is sent withtheopinion of the local Government pleader and the fmal decision regarding the futore action for Board's information.If however, time permits the Collectors may intimate to the Board the course of action proposed to be taken, but this .would not imply that Collector should await Board's orders before taking action in such cases.

(2) Notwithstanding the foregoir.g instructions, in cases where heavy stakes are involved or in casesinvolving questions of law or principle, or where the case IS a test case affecting other cases, written statements oraffidavits prepared by the solicitors should always be sent for Board's approval..

(3) Board's approval should always be sought where written statement or affidavits are to be filed inHigh CourtS or the Supreme Court.

(4) In Bombay and Calcutta, where the Branch Secretariat of the Law Ministry function, the Collectorsof Central Excise at Bombay and Calcutta should fIrst discuss with and obtain legal advice of the Law Ministryofficials there before making s reference to the Board for administrative approval. In case ,ofother Collectorates,the reference made to the Board for administrative approval etc. should invariably furnish thefollowingparticulars.

(a) brief facts of the case;

(b) detailed parawise comments on notices/writ petitions; etc.,

(c) point{s) of doubt. if any, which should receive special attention; and

(d) the opinion of the Council, if any. ,(F.No.40/156/65-CX.I.)

(5) Where an adversedecisioD is given against the Deparunent, the Collector should immediately

4

- initiate action to secure a copy of the order and to consider in consultation with the counsel who represented theDepartment as to what appellate remedies are to be resorted to, so that the required action may be taken wen in time.

(6) Any reference made in this behalf to the Ministry should explain the reasons for the adversedecision and the proposal for pursuing the appellate remedies or not doing so, and should have as its enclosures,-

(a) a copy of the adverse decision, and

(b) the opinion of the Counsel who appeared on behalf of the Depanment regarding filing of an appealor revision and the time available for filing such an appeal or revision.

(c) in cases of urgency and where the stakes are heavy, the Collectors should themselves discuss withthe Counsel and report the gist of discussion and the adyice of the Counsel to the Board/Governmentwhile seeking orders.

2.G Pendency of departmental proceedings till the Court case is oYer:- (1) In the absence of an orderofInterimStay by the Court, the departmental authority is not debarred from proceeding with the case, appeal or revision petitionseven when it comes to know that the party has, during the pendency of the case or in appeal or revision moved thecourt for a writ. Difficulties would howeyer arise if, after the writ is filed, the adjudicating officer or the appellateor the revising authority decided the case in a particular way, and, subsequently, the court comes to the oppositeconclusion. The practical difficulty of the records being called for by the Court is also relevant.

(2) The' Ministry of Law have. advised that each case should be considered separately and the authoritymay decide whether, even in the absence of a stay order from the couri, it should not stay its hands and defer its decisionuntil the Court has decided the case.

(3) It is presumed that such cases where parties go to Court during the pendency of their cases, appealsor revision petitions may not be many. To expedite such matters, therefore, the Central Government Counsel whowould be opposing the proceedings in Court can be instructed to make a pre! iminary objection inviting the Court'sattention to the fact that the party has alre3rly filed an appeal or revision petition before the statutory quasi-judicialauthority and has rushed to the Court during the pendency of such proceedings and, therefore, the Court should notdecide the matter but direct thepJrty topursue its remedies before the appellate or revising authority. If such procedureis followed, the Court would probably be inclined to accept the suggestion and refer the party back to the appellateor revision authority.

2.H Time schedule for dealing with suit notices/writ petitions etc.:- For the guidance of officers at differentlevels, dealing with court cases; a time schedule has been prescribed in Appendix XI.

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CHAPTER-IT

SEIZUllE OF GOODS

3. Power to seize: By virtue of Section 110 of the Customs Act, 1962 as made applicable in regard to like matters

in respect of the duties imposed by Section 3 of Central Excises and Salt Act, 1944 by Government of India, Ministryof Finance (Department of Revenue) Notification No. 68/63 dated the4th May, 1963 as amended. anything liableto confiscation can be seized in any place, either upon land or water, by any officer ofCustoms/Central Excise

or other person duly employed for prevention of smuggling. Power to stop and search vessels, cart etc., and toseize goods etc. and power to enter and search any land, building, enclosed place, premises, vessel, conveyance etc.

as provided in Rules 200 and 201 of Central fucise Rules, 1944 has been conferred on officers of and above therank of Inspectors of Central Excise. Searches should be made in accordance with the procedure laid down insection 18 of the Central Exdses and Salt Act, 1944.

4. Legality of detention of a vessel for carrying out searches for' smuggled goods suspected to be on board - In

a case where a ship was detained by the Customs authorities for carrying out an intensive search for smuggled goods

suspected to be on Board the ship, and, as a consequence its departure was delayed for about 3 days, a question aroseas to how far this action of the customs authorities was in keeping with the provisions of Law. The following questionsarose:

(i) Whether the customs authorities are lawfully entitled to detain a vessel and refuse it portclearance in order to search 00 board of vessel for goods intended to be sm uggted on receiptof infonnation that such goods are concealed on board; and

(ii) Once such goods have been found on board, whether the Customs can compel their unloading and,until that is done, refuse gran t of port clearance to the vessel.

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The position in this regard, is that Section 106 of the Customs Act gives customs authorities concernednecessary power to stop and search any vessel, for smuggled goods. This power is exercisable at any point within the

Indian territorial waters as weUasin port limits. Section I 10 of the Customs Act gives the powei 0:seizure of all t1Ungs

liable to confiscation either upon land or water. This is sufficient authority for compelling the unloadlng of smuggledgoods from a vessel. The question of refusal to grant port clearance to the vessel until unloading of seized goodsis complete does not arise, the ship cannot depan until the search, seizure and removal is completed. If it does, it wouldbe an intentional obstruction punishable under Section 133 of the Customs Act as also in specifiedcircwnstances underSection 117. Even if a vessel has obtained port clearance, it cannot depart before completion oflawfulsearch, seizureand removal of contraband goods discovered 00 board as a result ..

S. Things seized, how dealt with - (i) Goods seized in respect of offence against the Cen~ Excises IIId Salt Actand the Rules framed thereunder according to the provisions of Rule 200 may be delivered in the cJ.ae of a PoliceStation. As the godowns in the Police Stations do not have enough space for this purpose the ex~ aoods afterseizure and pending adjudication or release, may be kept in the Custody of the following:-

<a) an officer of ahe Central Excise De:partmeM; or

(b) the otfeDdccon &atiIlg suitable depoIit ••••••• 6IIj orthe probable penaltyanda~forsafecwstlOdy; ClI'

(c) a thint p8dy JCIIClalIy aliceuee alia' obtaining from him a JU&raDIee undettatiD& in tbc roo.-~A.~~bthe~of~~~~~

(ii) As the .custody of the goods, after seizure, is passed on &0 the GovemmeDt.11 would be the coocem oftlie depanment to see that the goods pending adjodication remain intact With this object ill view ahe ~ge Ofrtcer .Incharge of the jurisdiction in which the good5 pending adjudication are lying should inspect such goods at leastonce in a month in order to see that the goods ue irltact and they have neither been damag~.d by any natural or othercauses nor deteriorated. A report of this inspection should be sent by him to his SUpeL: officer in the rust week of

6

6. Disposal of perishable goods s€ized for breach of the Customs Ac~ ,Central Excises & Salt Act andCentral Excise Rules:- It would be against L~einterests of the party concerned as well as the government to let theperishable goods lie under seizure till such time the case against the party is adjudged by the competent authority.Ordinarily seized goods should be kept iGLZctup to the final adjudication, but where this is impossible as in the caseof perishable goods it is not merely permissible but obligatory on the part of the Customs and Central ExciseAuthorities to sell the goods before they deteriorate and to .keep the sale proceeds with them in order to protect theinterest of the party concerned. Where, therefore, perishable goods have been seized for the contravention of theCustoms Act and it is not advisable for any reason to release them against a bond or cash deposit they should besold in auction before they can deteriorate. The sale proceeds will be held in deposit to be returned to the ownerif it is eventually held that penal action is not justified. Where, however, it is ultimately held that an offence has beencommitted and the goods, if they were in the Custody of the Customs and Central Excise authorities, would have beenconfiscated, the adjudication order should state that the goods are liable to be confiscated but as they were perishablethey were auctioned /sold pending adjudication, and the sale proceeds which were held in deposit on behalf of theowner are confiscated and the owner given an option; (if deemed fit by the adjudicating authority) to redeem the saleproceeds on payment of a specified fine. Lanost care should be taken to ensure that the goods are as far as possiblesold for a fair price.

(iv) In the case of goods which have been seized and placed in the custody of the third party, the release ofthe said goods by the third party to the owner of the goods should be done in the presence of the departmental officerand the proper receipt in respect of release of all such goods should be obtained by the said officer. Such delivery wouldavoid unnecessary litigation at a later date.

every month. If the inspection discloses any signs of damage or deterioration sufficient details with· suitablerecommendations for further disposal of the goods should be furnished in the report. SeriOUsnotice should be takenof any deviation from this instruction since the government is very much concerned with the safety of the goodsduring pendency of adjudication.

5.A Goods detained, how dealt with: • Where goods have been detained for some reason or the other, buthave to be released on account of the fact that no prima facie case can be established on investigation the release ofdetained goods in such case may be pennitted by the Superintendent of Central Excise concerned unde!"intimationto the Assistant Collector. If the detention was made under specific orders or supervision ofa Senior Officer, the releaseorder should be issued only by such officer.

(iii) All officers making seizures must invariably take 4 samples of the excisable goods where the offenceis substitution itself or where substitution of seized excisable goods is likely to affect thecase adversely .These samplesshould be drawn in the presence of two i:1dependent witnesses. One sample should be handed over to the party,

one retained by the officer for any future reference or for any emergency, one despatched along with the seizure report

to the officer concerned and the 4th sample given to me Custodian oCtheseized goods. Samples may be kept in durable

containers whiclt should tJ'1en be wrapped \\ith cloth ifnecessary and then sealed. In case of whole leaf tobaccoa number of leaves may be tied into smcll "jutties" with a cloth band on the butt end and sealed; "jutties' so sealed

may then be placed inside long envelopes which should also be sealed by the Officer. The party, if he so desires

may also be pennitted to affix his seal on the samples. Each sample should be signed by the Central Excise Officer,

the party and the two witnesses. A declaration should also be obtained from the party that he is satisfied with thesamples drawn and that the samples are truly representative of the consignment(s) seized. This declaration shouldbe attested by the two witnesses so that there is no dispute later on about the representative character of the samples.

7. Payment of rent for storage of seized Excisable goods:- (1) If seized goods have been deposited with alicensee in accordance with item (iii) of paragraph 5, the licensee mayor may not claim storage rent. This matter should,however, be settled at the time of keeping the goods in the custody of licensees so that it does not become a subjectof any dispute later on because such claims for rent are tenable under Section 70 of the Indian Contract Act unlessan undertaking to the contrary exists. In cases, therefore, where the licensees are willing to keep the seized goodsin their custody without claiming any rent., the Seizing Officer should, before depositing the goods, obtain from thema written undertaking that no rent would be charged or claimed by them for the space occupied. If, however, theyinsist on the payment of storage rent, the terms should be settled in consultation with the Superintendent of CentralExcise concerned. However, such rent should be reasonable which such premises would otherwise fetch in the marketon the date on which such goods are stored or intended to be stored. (2) Where' neither the rent has been fixed at thetime of storage of seized excisable goods nor has any written undertaking been taken from the licensee, and where

i'I

7

either notices under section 80 of the Civil Procedure Code have been served or civil suits have been ftled, a reasonable

rent may be fIxed so that unnecessary litigation is avoided.

8. Recovery of storage cbarges of seized or comlScated goods from tbe owner :. Under rule 212-A of theC~nrral Excise Rules I.heowncr of the articles. confiscation of which has been adjudgeJ. who exercises his option to

pay fine HI lieu of confJScation. can be asked to pa)' stOt'agecharges. Demand for such storage charges from the ownerL: ~1eCC7'Sscated goods should. however ON be made the part oflhe order of confiscation itself but it should be madein trr k:, m of separaie endcrsfme.nt below tilt: adjud.ic.Jtion orae,r Ol'l JIe following lines:-

(a) 'Storage charges. if uny. arc payable;

~b) In view ofttle,[O,cgG;"e t- •••• ~:t~:~i.tsciearlhat no storage charges should be demanded ;;:-~'~{~";:,cdfrom the 0Wl1.•~f\~i i ,e z,,,,,is in the followil1g C~~l~S:

(i) u1 c::'~\:sm 'wbJCf\ glXlds have been sejl.',~(i,3djudjcatedupollandreleaseduncoilajtioi13Ily,,;;' ,;i;\-.,y :1;;v'n;; bC~\1 found to ha\'e been committed, il would be inequitable ;.J S41d~~~

~:'Jli:!'; . :U~l:,c:c. ,;:s Ii;;') either by :.0 appeal/second appeal tewg f; ;,'r:! C '.. ': ;';!" ,j

~'>""t ."~ ,~':~, ".', ~){' ;'~g~E:}ln;s.'~(~f~:r~v~r(~tSno (~(H~~)tri-i:ltfrom d-~ A"!t.2 .,.J' : (J[tjcr

[. ' .• i. ,,;.;~. ;" "uHli~;cation IS :"Ci. 3.sid,~by appeal/second anpc:<l Jnd'1;,!":, .. :" _ :'1\: ;cicast"d to :JK ('woer, ll~';~osiuon is anaJog:)u:,; to tbJ~ xhen

,,' ',;.;S . ;··;.,I.C';] ,0"".1 tilei'f n:lcascd. The 0 ;.'ne, oi such goods :dso is not Jiablt' In pay s~crage, ..•...F":;.

~ j' v:~:! ~,.~,--',.~'.. ,1~,¥' ·,f•.::; ~:'-;G~i.~~,l.ct: .. jn (J.; ~~:'-)IV ~;1.···,:~(;.._~·~t;e,\vht'.n 6'...;005 3r~ seiz(~(i _~lid~'r

)[ U·:f; Cu,st.c;~~:· '. ~ ~_;£.1·"'~, ji-ir~ :"\XJ(~~ ..~.::):;':.i •...c·' !~.:":.ICrcsr.,.)l1Si b;11':? of (he Dcp2StI;~:.:.nt an:..: ;';:~.; .

.• ,t~:;_,~:i!:Ci;(l;'£ ~;.(:. "~~, .",,,-..., 0..' II'(-~: ~"~ :~~) i.~;~·:~·,;.t;,.;Ju~~to ~~~{~t:iriC of ~..bcj;- confi~C4liu(~. J-!I~: ... ', , !.!""ef':2

..• ~.• ··.«t(, "":~·'l~:,.~(.~;1:j~.. i.:.:~ l ..;\,"j';,; :n.~;~n H~(::,custodyc~fth~I){}il.sJ·, ..~;.,iri~!~lybelcft to t:\~r\~t·;_ Tru~l

.J:".,~. (.~':,;i.~....t t:l~ v,-·f~,,~~_,~'t>:~~-..'.';:< :' ..~ ~';f~o\'~_~~i()n~;ofth~~ir o,;..'n.~(:~.l··bc "k1~'n~·wou!d apply jj' f-f}od~ ;;~:eair:~'?'i~:":,,,'ib~g~:Jg\~,are ;cfr If,. (h: C"SV;:);.:. ~,. 'Cl"; (\11<; ,;,'C awaitiilg cka.auc(; by the owner after !w:cting (' ".)'li"

:'·~l>'~-ii _;_~ 1,-'~ •• ,•.:~. ".J. L~J-'':::'~il".;(;~y~;.~' ;~u'J.,j~',V~:;'~,,,';, d: T •• ~~~·>i\1) ~~h:t:;,lstorn t{OUt;-..\ th~ p-.)silien is :.hal WhC,1a ((lrmJl c-·~~r or..;',r) . '~;(~'lhas is,,,~d an,i;; (:in..:I:' !:,.'I.: ,I' V' !l:i::':t:onl~a5heen ?;iwn allowing rcle.<,:;e of the goods cilhcrfDr horn·~

;x,;-,";':';; "i.i0'j 0; n,o shiprnw, ' , ;; ,:,> <'1>('0 ••.•. ; ,,;: pany 1.0pay the.: fine kVled and n.~decm the goods k,r purp;:;"es of

,",,,;,;;.!,,; (If s:ur,;\Icnt on iJ.c veiY d,h: ;)1 Jrder it"elf. ft would. however. be necessary to allow a few free days1':,1;'[, ;>,; <tare; , . ,'., '(lsc8rio!l ly~;\",~ c,!"'~, on-age i;; charge,! [01":;och goods. TIle (ji.;mand for wfwfage s1';00111

~; ':. Ut:r. •.~.~..:.~~·~..._~t.,.;~ ,~.~;~j,_., .. :~~;. j',.;~.. i..~·'"·:,,~.·:JS;:-~~·::L-3'~endGr~en\·o,{nonthefoI1QW~;1,gHil.":~"iaY

"v :.:...:,~ i,! the iOrwarding tHem;.:,:

.'S.!; S'1s?0s-ll1 0' (;{)nr:sn~U~;' ·',J".'·,!ISCdi":' goods llIdy be Tedet~mcd Uil pnym, .; ') . '~ly j~1e .l1;G ,.Jther

."1.~:; ,r;~'('H'".!;;'';-v''' '.i..C, .:_,~nk<i,mdei'Rllle212wll~ljn th·;::periodfix'oo b~; :he :idju;J:,3tillguff:cc; m ii,s (ink, ,;I.;e'>l':>H>..'_ ""p,X[ ('I \>·;"i~'hthe tline!'J .JPl- ,,::il:)C~,O.id iJppca; hcs expired, U" the"Pf'C.:'." ." ",.d '. :;~n~,:'l ha." been f:r,;,il) disposed of. sho:Jld, Il1lil;.: Ill:>l .a" ••..•{.C, be offered for ~e by

I' ',:. .,l: •• ',.,...: ... ". ~"';~ribej 1:1 c;:~ pa:agraph. Where, however. the goods are in a conditIon in',\hlch

[:'~'" '.i". ~:~"e!:,to dete..;~,•.••L ;.~ <,:,7;(.';,',' .: ;;:;:,··~nof the goods are out of all propoilion to their value or whereOllier lolmllat -.umpeliing ((:ason eXISlS, ui4. ,. •., Ll. (..C .•C<.:tOlmay order their sale by auction even before expiry of thelopccified tlm~-limir.. s,~r.i·": to ro"''''::ir·'l V:;, lhallhe <ImouOlof the bid of the highest bidder is not less than the(:xcise cuty leviable on the goods. In 1tI0SL L2....;e.5 in which goods arc sold after the Issue of the orner of confiscationbut befer\! the annulment of that order all i.lf'v:.;~ll:>ccond appeal and if that order IS anllul/cd, the Government would

I~ liable to make over the actual pwcceds0£ tile sale (less expenses of sale:;) and not the market value of lhe rfYxis10 the owner of the goods.

8

In the case of goods whose market value is estimated at Rs. 1,000 or over, professional auctioneers, ifavailable, may be employed on the tenns: "No sale, no commission".

The tenn "Government" wherever occurring in these conditions shall mean "the Pres ident ofIndia".(i)

8C Who may conduct an auction - Auctions will nonnally be oonducted by officer not lower than the rankof Superintendent. The Superintendent should supervise all auctions where th~marketvalueofthegoodsisestimatedto exceed Rs. 1,000; where such value exceeds Rs. 5,000 the Assistant Collector should endeavour to be present.

80 Notice of auction - Due notice of the auction should be given by the Superintendent The notice should

ordinarily take the form of advertisement in suitable local newspapers and/or handbills indicating among other thingsthe place and time during which intending purchasers may inspect the goods. The exact fonn and extent of publicityshould be determined with reference to the nature and the value of the goods and the class of persons likely to be

interested in their purchases, and in any event not more than 5 per cent of the estimated market value of the goodsshould be spent on such publicity in respect of any single auction.

8E Conditions of auction - (1) Intending bidders should be infonned at the auction immediately before itscommencement that the sale of goods will be subject to the following conditions:-

(ii) The fact of bidding for a lot by a person will be held as his unqualified agreement to the followingconditions of sale..

(iii) The amount of excise duty (if any, which will be announced at the auction) sha11be paid in additionto the amount of successful bid. In the case of· matches, the duty will be paid in the form of theprescribed excise duty labels ..

(iv)

(v)

A person bidding on behalf of another person should produce written authority from such otherperson authorising him to act on behalf of such other person in all matters at the auction sale. Inthe absence of such authority, the bid, if accepted, shall be registered in the name of the actualbidder and he shall be responsible to the Government as a result of his action without proper

authority. In the event of any dispute between bidders, the dispute shall be decided by the Collectorof Central Excise and the lot or lots in question re-auctioned at his discretion. His decision as tosuch acceptance shall be final and binding on all persons offering bids at the auction

"The Government of India reserves the right of withdrawing from the sale all or any part of thegoods mentioned in the auction list without any notice and without assigning any reasons therefor.

(vi) The goods will not be sold below a reserve price which well be fixed by the Government and keptsecret. Ordinarily all sales shall be made to the highest bidder. Government, however,reservesthe right to accept or reject the highest ot any bid without assigning any reason therefor.

(vii) The successful bidder must deposit an advance of25% of the bid amount or Rs.l "00/- whicheveris less immediately after the bid is accepted. This amount may either be deposited in the Treasuryon the same day or if for any reasons this be not possible, be paid on spot in 'cash to the officeraccepting the bid.

The balance of the amount of the bid and (except in the case of matches) the duty leviable on the goods, ifany, should be deposited within a week and the copies of the receipted challan produced before the officer concerned.If the bidder fails to deposit the original advance of 25% of the bid amount or Rs. 1,000 wh~chever is less orthe balance of the bid amount inclusive of duty, if any, within the above mentioned period, sale shall be treatedas cancelled and the onginal advance referred to above if already paid shall be forfeited to the Government andthe goods shall bere-soid as and when the Government think fit withoutany notice to the bidder at his risk and expense.Any loss or expenses incurred on such re-:.aJe shall be recovereg. from the bidder. The Government shall be entitledto recover from the L· • ..:.:." :.'1-.: cost of storage, warehousing or removal otthe goods, and any expense incurred inconnection with the re-sale or attempted resale. Any gain or any re-sale as aforesaid shall belong to the Governme!ltand the bidder shall not be entitled to any gain on such re-sale made on his default. This will be in addition to any action

9

that may be authorised by law:

(viii) All purchases, sales and other Central, Sweor local taxes, if any, that may be levied sbaBbe..,-.by the bidder, inclusive of the sale value.

(ix) The goods shall be and remain in every respect at therisk of the bidder from thedatcoflbe~F"':~of his bid, and the Government shall not be under any liability for the safe custody CX' 1be

preservation thereof from the date of acceptance.

(x) The goods are sold as they are, where they are. The whole of the lot or lots shall be taken fr<lluiJcwith all faults and errors in description or otherwise. Quantities, qualities, sizes, measunmcD15

number and weights as stated in the notice are approximate and no warrantee or guarantee sball be

implied. Goods are sold on the assumption that bidders have inspected the lots and know what they

are buying whether they have inspected them, or not The principle of Caveat emptel' will applyand no complaint will be entertained.

(xi) Purchasers will not be allowed to re-sell the goods in the auction premises and any such resale •••not be recognised any deli very orders will be made out in the name of the actual purchasc£ 0Bly.

(xii) All lots are sold ex-depot and purchasers should make their own arrangements fO('packing aDdtransport.

(xiii) Deliveries will be given during working hours on all working days. For any lot or portioa «lotremaining uncleared after the time allowed in the condition of sale, viz. 3 working days from thedate of payment of full purchase money the lot will be treated as abandoned and the $OCW'itydeposited and all sums paid for the lot will be forfeited to the Govt without any reference to thepurchaser, and the purcha.)er will not be entitled to any claim. If any lot is not removed within thetime specified, the Government may resell the lot orportion thereof at the bidder's risk and~,In addition to any loss that may be suffered Govt. may also recover from the parties c:oocerD04 acharge on account of storage space at the rate of 1% per diem on the auction sale price of the saidlot or lots or portion thereof till the date of the resale (inclusive).

(xiv) Without prejudice to the foregoing right to resale, the Government of India maypennit the purdaaerto remove the said lot orIots or portion thereof within an extended pedod and on payment in aPMoeof charges on account of storage space calculated as hereinbefore mentioned.

(xv) The buyer shall be responsible for any damage that may be done to the premises in taking dow CX'

removing the lot or lots bought by him. The Collector of Central Excise _or his representative may at his option arrange to make good such damage and ' the buyer sbaD paythe same on demand.

(xvi) Whene·'er any claim for the payment of ~ sum of money to the Government arises out of or waterthis auction sale against the buyer, Government shall, without prejudice to any other remedy, beentitled to deduct such sum of money from. any sum then due or which at any' time ~may become due to the buyer under any contract with Government If this is not sufficieRt 10cover the full amount recoverable the buyer shall pay to Government on demand the ••••~remaining due.

(xvii) All disputes and differences arising out of or in any way touching or conccming this agreementwbatsoever shall be referred to the sale arbitration of the Collector of Central Exclse ••....•.•_. or

any person nominated by him. It will be no objection that the arbitrator is a Government Senant,that he had to deal with the matter to which the agreement relates, and that in course of his duties,

such Government Servant has expressed any views on all or any of the matters in dispute·ordifference. The award of such arbitrator shall be fmal and binding on the parties to this agreementIt is a term of this agreement that in the event of such Arbitrator to whom the matter is origiaaIlyreferred being transferred or vacating his office by resignation or otherwise or becoming unable

1U

to act for any reason, the Collector of Central Exci",o at thc tim, ,:t' su:h tJansfe:r, vacationof offices or inability to act, shall appoint another per;;on to act:lS Arbitrwc)" in acrordancc withth~ terms of this agreement. Such persons shall be (':ltitleJ to proced 'Nilh the lcfcr~:1ce from the

stage at which it was left by his p;cdccc~':or. Th(~:\rbi(n~!c\r i',\;:y :I1S11 rrm:\ Lil'" !. time with the

consent of the parties enlarge the time ior mab.g llie award. it is als\~ a li~nEor [his j,lgrccmcnt

that no person other than a person nominated by the CoJkctm of Cen:.rJ I~):r,ise shallact as Arbitrator ann, if for any reason that is nol f)ossiillc, th~ ::;:HU:r is noL to be rd;;rrcd to

lUbitration at all. The value of arbiif3li:)i\ and the c1:;scssnwnt or cm,lS incillclllll1 :'0 lhe rdcn~nr:cand award shall be at the discretion of the ArbitralOr.

(xviii) No cheques will be accepted at the lime of sale by W;.'y (\l' :l(!v:Hit~;. F!,j);;pcc\iv,.:, purchasers arc,therefore, requ~sted to bear this condition in mind when deciding to attend the auction.

(2) Auction Memo - The auction memo should be in the following fo, m:

Auction memo for confisca\.edJattached excisable goods

1. Place, date and time of lluction.

2. No. and date of adjudication order, and by whom issued.

3. Authority (with No. and date) ordering disposal of the goods by auction sale.

4. Name and address of owner of goods.

<I

••••ooG

5. Name and address of Custodian of goods.

6. (a) Description of the goods;

(b) Variety

(c) Rate of duty.

'Irt

7. Quantity of goods.(i) as per the adjudication order;(ll). as on date of auction;(ill) total duty on the goods as on date of auction.

8. Period of storage since seizure.

9. Condition of goods at the time of auction.

10. Ex-duty value as recorded at the time of seizure.

11. Fme imposed in lieu of confiscation. (as per adjudication order)

12 Incidental charges incurred. if any:

,. (a) Godown rent:(b) Transport Charges:(c) Expenses on auction (on account of ....)(d) Total incidental charges.

13. Reserve price flXed;.Bid List

(Not to be announced)

Signature of the highest bidder.

Highest bid of Rs is of Shri•......................•

S1.No. Name and address of the bidders

11

"

Signature and designation of Officer conducting auction.

Particulars of Deposit

The amount of Rs has been deposited by Soo (the highest bidder) into the........Bank/Treasury under Challan No dated .

Amount of duty (if paid_ Rs in Bank/freasury under Challan No dated .

Signature and designation of Officer.

Confirmation of bid

The highest bid of. (in words Rupees ) offered by Shri .is approved by me and the sale is confirmed in favour of... .

Signature and designation of theofficer approving the auction.

Place

Date

8G Reserve Price' of conrascated goods -

(Hi) If the reseve price so determined is not realised at a fU'Stauction a fresh reserve pricC~ou~ting .: .

The officer conducting the auction is himself competent of fix the reserve price in respect of thatauction..The reserve price should be so fixed as to cover the fine adjudged in lieu of confJSation.plus allother charges (if any) incurred. or likely tobe incurred in respect of the goods since their seizUreuptothe timeof theirfmal disposal provided thatitdoes not. inanycase exceed its ruling wholesale market •price (not retail price) leaving a reasonable margin of profit to the intending buyers. In view ofthe provision of paragraph (8E). above. the amount of the duty (if any) should be excluded fromthe reserve price: any direct penalty imposed upon the owner of the goods should be similarlyexcluded.

(ii)

(i)

SF Duty on confiscated goods - The rates of duty applicable to confiscated goods redeemed by the owner ordisposed of in auction as also other duties of excise. if any. are the rates prevailing on the date of payment, the auctionbid being exclusive of the duty payable. The rates and the amount oCthe duties should be announced at thecommencement of the auction.

12

(iv)

(v)

to not less than the charges incurred on the goods may be fiXed for a second auction or for a private

sale and in the last resort, the restriction in regard to reserve price may be entirely removed. It must,

however, becarefully noted that Government cannot in anycircumstances part with the goods

unless at least the excise duty (if any) determined to be payable thezeon is fully realised.

The reserve price should be kept strictly secret as otherwise it has a tendency to depress the bids.

Realisation of the best possible price - The fixation of a reserve price should not lead the officer

supervising the auction to believe that Government is not interested in securing at the auctioq a

price higher than the reserve price, the auction should be conducted on purely commercial lineswith a view to realising the highest possible value for the goods.

88 Who may accept the bid - The officer conducting the auction may himself accept the bid, provided it is notless than ,reserve price.

8L Sale by Private treaty - It should be noted that the method of sale by private treaty is not permissible exceptafter failure of a flCStauction. This method should not be resorted to without the prior approval of the adjudicatingofficer.

Officers should bear in mind that even a sale by private treaty cannot be effected for a price less than the

amount of duty (if any) and that every effort should be made to realise the highest possible price.

8J8K

Deleted.

Deleted

8L Case of owner bidding at auction - The owner should be'separately and specifically notified of the

intention of Government to sell the goods as a consequence of his failure to redeem them in accordance with theprovisions of section 34 of the Act and Rule 212. If he should bid at the auction, his bid should not be accepted'unless

. it is atleastequalto the reserve price as determined under paragraph 8.G(i) plus any direct penalty which may have

been imposed upon him.

8M Rent due to public carrier - Where goods are seized during transit in a public carrier, or are found lyingabandoned in a public carrier's premises, and are subsequently confiscated and sold by Govl. any rent or hire dueto the carrier may be paid from the procee.ds of the sale subject to all claims of the State on accoun t of duty and othercharges being fully satisfied as flCStcharge on such proceeds. It must, however, be borne in mind that when goodsare confiscated to the State, any proprietary or other rights existing in respect of them at the time of the seizureare automatically extinguished, so that any payments to parties other than the State of rent or other charges out of thesurplus left from the sale proceeds of such goods after deducting the dues to the State are made purely ex-gratia andcannot be claimed as a matter of righL

8N Deleted..

80 Disposal or goods seized but not confISCated - Goods seized under any of the provisions of the Act or theRules,' may, in certain circumstances, have to be released and where such an order has been passed, but the ownerof the goods does not within a period of one month appear to claim them and tender the duties etc., in respect thereof,the goods may be sold by public auction and the duties etc., recovered from the sale proceeds. This should always bemade clear in the release order itself. As the goods are not confiscated to the State, the surplus of the sale-proceeds

will be available to the owner and it should be notified to the owner immediately after the conclusion of the sale. Themanner of conducting an auction sale of such goods will be the same as indicated in paragraphs 8.C to 8.M.

'S.P Seized goods lying in the custody or third party - Where goods have been seized and placed in the custodyof a third party, release of the said goods by the third party to the onwer of the goods is not being done in the presenceof departmental officers. This is yet to be a peculiar situation and in certain circumstances the owners after obtainingthe goods have filed claims against the Department for the said goods on the ground that the persons in whose custodythe goods were placed have not delivered the same. Hence, in such cases goods should be released by the third partyto the owner in thepresence of the Central Excise Officer and a proper receipt in respect of release of such goods shouldbe obtained by the said officer.

'~1:j;H" I lll;;Uil 11-.1IH·ji

13

8Q Deleted.

8R Disposalof unclaimedgoods;,(1) Goods lying with a railway administtation.

(a) Railway administrations have instructions to send due intimation to the nearest Central ExciseOfficer of their intention to auction unclaimed consignments containing matd1es, whiCh areeitMzpacked,loose or are packed in packets not bearing Cectral Excise Stamps or where Central Exc!seStamps have been tom.

(b) The Range Officer must detennine, in accordance with following insttuctions whether any dutyis payable at the time of the auction and announce to intending bidders at tile auction thaBIIe

sale of the goods will be subject to the conditions mentioned in paragraph 8E except that the dutyon matches will be paid in cash and that the goods will not be released until the duty payable if any

has been deposited by the purchasrl.

(c) Since the procedure of sale is so designed as to secure the realisation of the duty (1fany) independentlyof the proceeds of the sale. the railway administration are free to appropriate such proceeds in fuD..

(d) As a matter of administrative convenience, fonnal orders of confiscation need not be made whelethe goods are technically liable to conftscation, the duty (if any) should be realized in accordaDcewith prescribed procedure by a letter of demand and classified and accounted foras a misceJlaneousdemand of duty.

(e) No notice need be taken of quantities not exceeding one gross of mafCb boxes.

(f) In matches packets, the Central Excise Stamps which are tom but the damage clearly appears to beaccidental, a provisional deposit of duty may be taken and the case recommended to cbe Assi~t

Collector for a refund of the deposit after proper investigation. Where the matches are in bulkor packets which do not bear any Central Excise Stamps at all, the offJCel' mustdetermine whetbetthe value of the goods brings .them within the taxable limit and arrive at the proper amount ofduty, if any,. Enquiries should, if necessary, be made at the place of booting asascenaiDedfrom the railway records. As far as possible, the enquiries should be CODducted with the c0­operation of the railway authorities prior to the auction/sile, SO as to enable the officer to lDDoaDCCin advance at the auction the exact position regarding the purchaser's ability for payment of duty.

(g) The duty must be recovered in cash. Since it is improbable thatconsignmenlSofdlisdescriptioowould, after purchase at tbeauction, be distributed for sale to a large number of dea1asav«a widearea, any seller challenged under rule 231 woUld be in a position to prove witboat IClrious cJi~that duty has been duly paid upon the goods.

(2) Action when goods are seized - When unclaimed and abandoned goods are seizeclbyaCe 1 ~_

Excise Offtcer, it is not always necessary Cor the department to handover the same to the Police. TIJe·. QiIitiiBd­

Procedure Code does not confer on the police any unqualified power. to take charge of unclaimed, •. ~excisable goods. Before the police could seize unclaimed goods, it is necessary (i) that it should beal1eged<ir~that the same had been stolen, or (ii) that the same should be under circumstances which create suspicion of Ibecommission of an offence. In other cases, the Central Excise Offtcers are themselves cQmpeteot IlCCOIdiDg tolaw, to take charge of unclaimed and abandoned goods and dispose of them, according tolaw.HDwoYCl',~_the goods come into custody of Central Excise Officers, it may well be that. in some cases, the goods maybO~~by the police. But where they do not require the goods and where there is prima facie evidence that die"''''offended against Central Excise Rules, the department should proceed to adjudicate the casc;~,l1:,~ .­with the principles of natural justice; a show-cause notice should be issued. in aD such caselliWi~lDoadt·.time to the "owner" for submitting his reply. The notice should be exhibited on the office notice boIRLk sboUld also

be published in the official gazette if the value of unclaimed and abandoned goods exceeds Rs.soo. If DO" is

14

receivedandlor if no one turns up to claim the goods within the period mentioned above, a fonnal order of confiscationof the goods Should be issued giving an option to the "owner" under section 34 to pay in lieu of confiscation such fine

as the officer may adjudicate. A time -limit of 15 days should be allowed in the adjudication order for exercise ofsuch option. If the goods are still not claimed. they may be dealt with in accordance with the procedure laid down

in the preceding paragraphs.

8S Procedure when excisable goods are seized by Police Officers - When a Police Officer seizes excisable

goods he has to prepare and deliver under Section 103 of the Criminal Procedure Code a list of all the things seized

in the course of the search and hand over a copy of the list to the occupant. If the goods are non-duty-paid the Police

Officer should be requested to deliver a copy of the list of the seized goods to the nearest Central Excise Officer

who. upon receipt of the list, shall inform the Police Officer that duty on the goods seized by him was not paid and

that an intimation should. therefore. be sent to him in due course when the goods are intended to be disposed of. The

Central Excise Officer should keep a watch on the disposal of the goods and should be present at the time of their

disposal and arrange to collect the duty. If the goods are to be auctioned, he should attend the auction and announce

to the intending bidders what the amount of excise duty is and that the duty shall be payable in addition to the amount

of the successful bid. He should also issue transport permits where necessary to enable the successful bidder to remove

the goods

(jt

••••o

15

CHAPTERllI

SHOW CAUSE NOTICE

9. - Issue or show cause:- Functions of adjudication are quasijudiciaI in nature. Although there is no specific

provision in the Central Exdses & S<.1lAct, 1944 requiring a show_Cause notice to be issued to the party beforeadjudicating a case, the principles of natural justice require ihat the person concerned must know the allegations againsthim-and the evidence on which they are based and an adec~uate opportunity to meet those allegations should be

given to him. On customs s;de, howev;r, S~~ctim: 124 of the Customs Act makes the issue of a show-cause noticemandatory. The principles of r,att'.:";J j";u.;,; which h;!-,Ie get 10 be observed by all judicial and quasi-judicial bodiesme that a y<:.i ty shoulJ not b;; cond..-mc.:'~ L:r:,;.;,itrd,that he should how what the cl"l?uge against hirr, is, t.iJat he SllOUld

OC heard ii, ;iiS defence, mat he should b: gi<'en ,):;1 opportunity to lead evidence, and he should also be given an

0pp01 tm,iiY to eX21;ine ;~'l';'~nEti.cd;;~~\:.::Ie!: arc hc,[nIe Ihe adjudicating authority for his defence. In thE' ye-3T 1924~~"",·.-:h···rT·~r";"" ."...•rTl,··!·,f'·'o(,·dh,.~ rt"-·~ ..• 1,_:; •. ,.,' r>- ,l" •..•... r""~di t " -to f If'c,,; L.uC, ~u"",~e v.( i.u: '-'"~hI; p·,Rltl,.],.J i.'.: .• (l()d! all Ud1').Q~.;.u- 1(: urn I. IS liO, mere y 0 some Importance-·

',,;., ·.··~' .. ;r ••·'.- .. ';.·.·._~ ••. ,,,.·'! •• ;, :. ' •• i" ..P ··,t ·"l,·l,·'d .') 1.. ,tr •. ,trl ••.•" ••.•·r ~.1.,. ~ 'b .:ll·b: 'tl. ~~,0, kl;",",';il...),,".'l'!illJ·.J. """'r':' ,,,::. J";' "'~. "H~'~I<J11·., OILA} lYv O,:C,lIUt Mh;·u ••...U"l.tl.e~w.Y cr:il unocu te-U1] e seen, ' ... :..........•.... ,1•.".",,f· ~•. ;1 •... ' ..• " •• '."" ~"::,;rI:"';"",, rc: ..",··t ""'.~",'!-rt:·'"t·; • ,.I'd "t- .• ',.) t\; iJ""Jf; •• , .:::., ~'J;.~'Ci;;, l.liC HUt] CI l.; \.,Y o.'J.l"'..ll· •..ctii·"C OH"i",,( 0 en~~,,",u.4 Jl::iuCe IS nOl or.u) on.;,vUL IS seen

,,-, ~.,:. ;;. fr,~ T~' '~"', J~""l H U"'C\,"':" r.~ :,'" -,;, t ~- :-'-, ~:-"I~~;·''''11:,.~:"1~'" • 1It...:I ; •..•(1"•• r··h': ," !~ ~t' ,~t tho..,.. .... /'t •.....••x., ud,., .. H L L\..dt.~, .•..."v ii, lJ,Cl!)le~.. '~",""~" jG~,~,,,. ",r.~l U,e .~"u.eG. ,)"')\\ ··~.aUst:nouc ... 0 •....pe.1>on COD",.e.rnec

t:~/i ~:}\.iPP1y of (O~:f_S h;~;LiCi:UneiiL' j ~-' d,-'p~:~_h!:.~~;~a~proce~dingg.- The adjudicating auulod:.ies should s;upp!y

v; ;.i,(; p".r:y COp;~f oJ' an ojl': ,:(jCUll'·;';!::,..:· : (C,~n'~:; to ii;. the sh-:rv;..o:;ause-l,ouce witIiOat charging t.'1e party for L'1esc

,:.>_;pi:~s~r:) :J.13>~el" Vr-h8l [hc'-~edocu~~~;';~:_" Q!.T: if ~i·F~r{.:;is ~1rf~tJeSi:[01 il'lc sami~_ 1\.$ r(:gE.rcIs O;~!:J~; daciJ:-ner.~t.s.,the

party \vo:.~ldt:~~-~tG ~}?_yy().( !hc cup;'\~·::; ~'J. ">~~. (;,. ,.un-~::';-:~_~:~~-!'.:chh,e \-\!J~ts fG reiy U~G in putjng tl~ h~scL;f:n=:e'~See

al ..,l) para 260 of Basic Ivianu:::1).

Hi. FUl'l1l:1fsJ:lOY;'·cau::;e·nutk•..;· V:;:.h a vi.ew LV \:Oi.~0nniag to the principles of natura! justice nalTa~.d inthe prece.diag p2.iagraph it i:~ECCCSSar) L-~~tLfl(. sIko\v-cHusc notice should give a cJear description cfthe alleg.2.tionsaC\-j ci1,lrg~-;sagr11:1sf L.L(;F?rSCI~ COi1ce~Ti·.k _~:i:, she: J(: ..<t;~ogi,;/c p3.rlicuIar~ of the factl: 'Nhich flli"1lish the ff:.a5()nto believei.lut sc~z,~dgO<Xis am liahk tv confisc"L:C::l. It is an important element of natUi-al justice that the p:.my affected musthave an opportunity not only of stating ;,is own case bul also of knO\,ir.,; the case which he has to meet He musthave a reasonable and fair opportunity La controvert the evidence on which t..'1e proposed action rests- a fairopportunity for correcting or ciJntraJicu.r,g allY relevant statement prejudicial to his view It may not be essentialto disclose or quote or make availaUe fG~ inspecting any confidential report or opinion or disclosure its sourcebut it is the validity of the order becaus.c-an adjudication is a quasi-judicial act. Rules or sections of the rekvantAct or any notifications issued there under alleged to have been contravened and the rules or sections of any Act under

whieh the punishment or penalty, fine or c.onfi&:.;ationetc. is proposed to be· imposed, should be clearly and specifical1 y

quoted in the show-cause notice. Punishment should not be imposed without asking the party to show-cause againstthe proposed ac tion. Therefore, punishm e.nt imposed under a rule or a section of the Act not quoted in the show causenotice or under a rule or a section different from that quoted in the show-cause notice would not re in order. It ia,therefore, of utmost importance that appropriate and applicable rules or sections of the Act contravened or underwhich action is proposed to be taken should be stated in the show-cause notice after careful consideration of the factsof the case. Detailed instructions regarding the grant of personal hearing would be found in chapterlV; it is enoughfor the purpose of this paragraph to lay down that an opportunity of personal hearing must be offered in the show­cause notice itself. In order to achieve uniformity of procedure the show-cause notice in Central excise cases sh6uldbe issued in the form in Appendix I. So far as land customs cases are concerned fonn in Appendix I-A may be adopted.

11. Time to be aUowed for reply to the show-cause notice.- Generally the period to be allowed to the person

concerned for submitting reply to the show-cause no~ce should be one month from the date of receipt of the noticeby him. This time limit should be clearly stated in the show-cause notice. If the person concerned on account of catainreasons, is not able to submit his reply within the time- limit and makes a request for extension of the period.the officer competent to adjudge the case may grant such extension as he deems fit if he is satisfied that the reasonsfurnished by the person concerned are genuine .•

It should generally be possible for the parties to adhere to the time limit and submit their written reply

16

within the specified extended period. Consequently, circumspection should be exercised that extension beyond theperiod of one month is not8§ked for or granted as a matter of routine or on flimsy grounds. Extension should be grantedonl~ in those cases where on careful examination, it is noticed that the case is of such a complex nature or failureto give the extension to would cause irreparable loss to the party. Even in such cases, the extension should be granted

only once, unless there are further and extremely convincing circumstances warraming the second extension .

.12. Manner or service or show cause notice-Show cause notices should be sent by registered post.

acknowledgment due. In cases where the person concerned refuses the cover containing the show cause notice, the

actofthedepartmentinsendingthenotice by registered post acknowledgment due, would be deemed to be a sufficient

service of the said notice. It means that an opportunity to show cause has been given to him but he has, by his

act of refusing the delivery, failed to avail ofit. In such cases the cover returned with the endorsement "refused" should

be preserved intact, unopened, in the relevant me so that it would serve as a piece of evidence that the person concerned

failed to avail of the opportunity of defence offered to him. In case where the cover containing the show cause notice

is returned by the postal authorities with an endorsement "not in town" etc. an attempt should be made to serve

the notice through some local excise staff if it can be conveniently done. The cover containing the endorsement "not

in town" should also be preserved in the relevant file. In all other cases, Le., where the service of the notice is notconvenient, a copy may be pasted on the "Notice Board"of the office and a copy on the door of the party's last knownresidence. TheJ'e may be cases where the person concerned calls at the office and desires the notice to be deliveredon him personally; no objection should Qe taken to delivering the notices personally provided an acknowledgmentin writing is ta1cenfrom the person concerned. So far as customs is concerned the manner of service is containedin sec. 153 of the Customs Act 1962.

13. Issue ohhow-cause Notke to owners of conveYlinces lIs('d ill Removal of ~ollds Lillhl(' to Ccmlisclltioll.­

Under Section 115 of the Customs Act any conveyance used in a removal of any goods liable to confiscation can

~ confiscated unless the owner of the conveyance, if he be other than the owner of me goods, proves that it was so

used without his knowledge or connivance. In view of section 124 ibid the owner of the conveyance will also have

to lle issued with a show cause notice and given adequate opportunity to explain why the conveyance in question

should not be confiscated.

14. Show Cause notice may be dispensed with in certain cases:(i) Section 124 of the Customs Act provides

that where the owner of any goods liable to confiscation so desires, the notice of show cause as well as his explanationagainst the goods of confiscation may be oral. In such cases the issue of written notices may be dispensed with.In cases where the offender is due to leave the country very shortly, and is anxious to have the matter settled straightaway he may offer an explanation in writing and ask for the show-cause notice to be dispensed with, in which casethe Customs House can proceed to adjudicate without risk. In other cases, the steamer agent might guarantee to payany penalty that may be imposed. Here it would be possible to give a reasonable time for replying. Where, however,the accused is leaving shortly, and no guarantee is forthcoming from the steamer agents the Customs House cannotbe accused of failure to observe principles of natural justice if it reduces the period allowed for replying to the showcause notice. Allowing a longer period when it is certain that the offender will be out of the country before thatperiod has expired, would reduce the provisions of law to a nullity,

(ii) On the principles that no show cause notice is necessary if tht: person concerned declares in writingthat he is aware of th~ offence/contravention alleged against him and desires that orders thereon may 00 passedas early as possible it has been considered expedient to combine the form of show-cause notice and explanationprovided the value of goods involved is less than Rs.500. No separate show-cause notic:.: is required if the personconcerned declares in writing in the Notice-cum-Explanation proforma (Appendix III) that he is aware of theoffence/contravention alleged against him and desires after furnishing such explanation as he thinks necessarythatorders there:>n may be passed as early as possible without calling upon him to furnish any further explanation.The case papers may then be forwarded to the competent adjudicating autllOrity with suitable comments for disposalat once. On the same principle this procedure may also be made use of in <inypetty cases where seizure of goodsis not involved, such as incorrect maintenance of accounts, loss of T.P.3 forms and other minor offences meritingimposition of penalties below Rs.50. The object of issuing a show cause m~mo before adjudication is to complywith the principles of natural justice that no one should be condemned unheard or behind this back but that the other

party s~ould be heard. Where the party affected declares in writing that he is aware of the contravention and offersan expIanation and prays for orders being passed thereon, this requirement is fulfilled and it is not necessary toissue a formal show-cause memo. In such case the party cannot turn round and impugn the order for want of anopportunity to meet the allegation and defend himself. But it must be borne in mind that the action must be taken·

, .

/17

011 the pound wbich the pmy admits to know. Ie the ground of the action of any of the allegations on which it is

fouqdccl is diffClalt from dJat admitted to be within the knowledge of the pany affected,· it would "be open to himto plead surprise and want of notice and opportunity to defend., H, therefore, the facts admitted in the Notice-cum­ExpIaDation ~.DOt to form the basis of the proposed action, a separate show-cause notice must inVariably be" issued.The Notice-cum-ExpJanation profonna must be obtained duly ·f1l1edin by the detecting officer on the spot from the

penon ~ in case be is willirig to avail of this procedure.

"(ill) In ~ where the statements of persons or any other evidence is sought to be relied upon against them

during theadjudicuOli proceedings, copies of such statements or evidence should be furnished to such persons before

taking any decision In such cases.

Due care and precautions should also be taken to ensure that the statements of such persons are recorded, as

far as possible, in the language known to such persons.

(iv) The N¢ce-cum-ExpIanation procedure should be followed mutatis mutandis in respect of customs casesas well provided the value of the goods involoved is less than Rs. SOO/. A detention receipt and Notice-cum­

Explanation memo should be issued sinultanteously by the Officer-in-charge of the Customs area who will beeida a Superintendent or an Inspector of Central Excise. In those cases where the seizures are made by the Officer­in-charge of the Preventive Check Posts or Patrol Parties the detention receipt and the Notice-cum-Explanation memoshould isfue ovec the signature of the Officer-in-charge of the Customs area. If the Preventive Check Posts are at adistance from the Customs area there is no objection to the officer-in.charge of the Preventive Posts or the PatrolParties also "issuing the Notice-cum-Explaruition over his own signature.

14A Issue of separate show cause notices. one relating to seized goods and other relating to offence casesbooked for past dearances-

Ministry of Law has clarified the following two issues:

(i) Whether it would be permissible and appropriate under the law to issue show cal,lse notices separatelyin respect of the goods that have been seized Wid in which case the show cause notice has to ~ issued within sixmonths, or the extended period and the other in relation to offence relating to the earlier period detected as a follow-up action of the seizure. '

(ii) Whether investigation can be continued' even' after issue of the show cause notices to collect furtherevidence etc.

Regarding the issue at (i) above, the Law Ministry has clarified that separate show cause notice can be issued,one relating to seized goods and another for offence relating to the earlier period. As reg~ds the issue at (ii) above,there,is no legal bar in continuing the investigation even after the show cause notice has been issued. However,if any evidence is collected which has to be relied upon in the adjudication proceedings, sufficient opportunitymay have to be afforded to the assessee to challenge the same.

15. Issue or show cause notice by officers other than the Adjudicating Authority .-'There L no legal objectionto the issue of show cause notices by OfflCCCS other than the adjudicating authority. However, only in exceptionalcircumstances should the show cause notice be issued by the officer who would not be adjudicating the case.

Where the show-cause notices are issued by officers other than the adjudicating authority the parties!licensees must, however, be asked to show-cause direct to the adjudicating officer concerned, whose designationand full address must be indicated on the notice. On receipt of the reply the adjudicating officer should examineall the material and evidence, before arriving at a decision.

The above instructions are subject to the provisions contained in Section llA of the Central Excises &Salt Act where ~ extended period of 5 YC<iI'S is required to be invoked .•

16. Omission or tbe words "Offender" and 'Accused' from Departmental Proceedings._- The Trade andthe assesses are averse to their being termed as "Offender" or "accused" in departmental proceeding. Whilethe Act itself uses the expressions "offence", "accused" "penalties", etc. and the fact that breach of law (which

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SUf~11t'H I;'JS re· IV;, i j\!'

(," (',,["'l'(,-'i,(', ",'.",.,.".,ute u(:t.: It),l "") 011/ .. A:I." t:, '",,, ....•• -.I: .. ,

(A b ,:"fl;t!o c .1"." I,;".r'G) ,h. C} lll~ ,••tl, ••!J

(F.No. 40/1l3/l?5-CXI, dated 17.10.1966).

However, if the amollnt iij'lolv;:ri i~,J:r,J,i" "; "

the own~r has 1I0t been pr",pedy in!\."::I.\)i. ,,' I..

does not necessarily mean criminal law) justifies kgaUy the use of such tem:s, i! is not very diHi.cti!t tf! find appr(Jpri3,w

substitutes for such tenns. With a view to mai.ntaiiling a hsppy relationship hf',tw,~;n ili!)gov C':r.1rllent and iLr.: aSF.f.;Si;i'S

no mention of the words "offender" and "aC(:u:;e,.l'·· should be lHai~e. :m d. ',~!iu:l ·i1Xl','(;e"Fngs. In the show c:,s.n·­

notice as well as in the order of adjudicalioli tilL; p':' :-;.;;1;I;\'(;! \".,; u(Af:li(~d,',I;, "!,j'en~(;t;cOl1ccmcd" \Jf I.

b d· 'bedb S' '{ '1' ;., Ii ,. , - ., ",: r., -.~:(·";·'"f,·.r".,,,·ql.rHT}'')'''''may e es~n y name. m11 a. y ,,1 .•1., ;JiJPI.:<,1 <t.,,,; V ' : .'-:.. ',"tL ,I. ',J ~,),-,I.,,:...L <~..,dlv(!.:. ,1" t.:, \ •

and petitioner respcctive!y .

Signature , .of Central Excise

THE SCIlliJ2.W

Given WIder my hand seal

To

17A. Non-attendance ill ohcJj,;;n;;,,;~G f. i.j~:;~'.mx:: . ,,~ '.. ' <,; .. :3 i'':;:'.:"L,L; l<~cif.:e;;",,:i

Act, 1944:- If a summonc (fonn gi'if.;n h;,LV:) om,;·;, ::~",,~~,,; i. ,}! ;;:., i 1:,{C;';(;£ ,.\ftlJ:';alt A.tt i:: jE~iF:,(ibyanofficerfallhlgwitllin thecu~cgOlY ol ciiicc:::'-:.·)",., .':1,. '.'i"I' ,;,;(:.(,':,.),,1 'l,;:( under ~~..:1i:·.,

14 in the C.E. Manual) and it i:idi~:()\'c.•..("l,lJH.;I';·'~.,. '., ". i:i '''' ;~~:.od::Er:diuCl lA\)f U.!l.;J'H.V·,

Penal Code, provided that person served wr.l, u~r.~,li;;;;',~" .oj C: .. ;,' .,; e,:u:;-;ii:J.} ;'-i;\sons iaHillg with;" d;l;

purview of section 132 of the Civil Proc,~lmc ('vi;, ,

Dated , .

If you fail to comply with this order withou!. lawful CAe llse you will be liable to be punished undersection 174 and 175 of the Indian Penal Code, 1860.

NOTE: The officer conducting the ~nquiry should himself sign the summons which are issued by him under Sec. 14of the Central Excises and Salt Act, 1944.

Place Seal. ""

Where your attendance is cor;;~id(~i.cd ::~,~Ci.';':·::~';;;'~l·~:-: ~;:.\. ;)>-)'.'I.~'. i~!qliiry )'vu (}!e t·;_~:r~.t)y!t4ilired toappear in 1)Cnmn before the undersigned on ~hc,., ,(~ayGC J9 ; <It.. .•..•...•• O'clock

by an alJthorised agentin the forenoon and to bring Wilh yoti or :send ihe dOG:H!i(;!W; ,:r.ci/(Ji' Ul;rl~;:;;;;y;ciflf.d in the Sd.cdule which are in yourpossession or under your control.

17. Failure to Reply tosho·w·crmse m;tkr:;; '·':1!f;:U·: 1;';{

served and the accused person fails to reply, i; " ~jDi ir·'u'.tj,.: "notice.

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19

178 Issue or show-cause notice within the period specified in seetie 110(2) orthe CustomsAct, 1962..Once

a notice under Section 124 of the Customs Act, 1962 (lD$Ieapplicableto CentralBx~ise cases) hasbeenissuedwitbin

the period mentioned in Section 110(2) of thC'CustomsAct,1962 compliance withtherequirementoftbatactioa

is complete, and if the original order of adjudicatiQD passed in ~uel is quashed for any reason eithri by the .AppeUate.

or a revising authority or by a Court and a fresb adjudication becomes necessary, Secition 110 of the Custon,ls Act.

1962 does not come into play again, although nOtice .Under Section 124 mav have to be given before iDstitUtiDi

fresh proceedings.

17C. The jurisdiction to adjudicate a case where the actual' manufacturer cannot be Ioca~~' II'his identity established.- Where the actual manufacturer oCthe goods ~not be located/traced or his identity clearlyestablished, in view of the provisions of the rules 200 and 223A of the Central Excise Rules 1944, the Officer witbinwhose jurisdiction the goods' have been seized would be competent to decide the case.

lID Issue ofSbow Cause Notice on receipt or Audit Objections etc.:-(i} Immediately on receipt of objectioll

from the A.G.' s Audit Party, demand-cum-show-cause-notice should be issued without any loss of time eYaa ifthe Central Excise officer does not agree with.the Audidt's point of view. If the Department does not agree ~tbe.audit objection and the DepU's stand is ultimately accepted by the A.G., such. demand-cum-show-cause DOticemay be withdrawn on settlement of the audit objection. Till settlement of the audit objection, either the demand shouldbe raised periodically, or the assessments made provisional, so that duty demarld does not become time-barred foeanyperioo ..

(ii) In respect of audit objection raised by the Internal Audit parties, the demand-cum-show-causcHlolk:e

should be issued immediately if the objection is, prima facie, acceptable. Where the Asstt. Collector does not agreewith the Internal Audit Party's point of view, he should promptly refer the matter to the Collector who should takea final view within one month of the issue of the Audit Repon and indicate his views to the Divisional Asstt.Collector and DC/Ac(Audit) for taking immediate necessay follow-up action. Similar action should be taken if 18objection has been raised by the valuation Cell in respect of an approved cIassificaton/price lisL

(iii) Where demand-cum-show cause notice can be issued onlyon receipt of the information from anassesscc.the information should be obtained without any loss of time. In case an assessee is reluctant to furnish the information,summons calling for the requisite information should be issued to him under section 14 of the Central Excises andSalt Act, 1944. Appropriate action for dishonoring such summons should also be taken. If necessary, the I'eOC)rds inwhich the requisite information is available. may be seized under a search warrant in order to thwart an att$1Dt onthe part of the assessee to make the demands time -barred.

(iv) In the cases referred to in sub-paras (i), (ii) and (iii) above, show cause notice should normally be issuedfor a perioo of 6 months. The matter should also simultaneously be examined whether there is any case foe fraud,Collusion, wilful misstatement or suppression of facts by the assessee. The matter should be taken up with the Collectorand it should be examined on priority basis in the Collectorate. If need arises, a supplementary show cause noticeshould be issued clearly mentioning therein the facts with suppon that there was fraud, collusion, wilful misstatementor suppression of facts by the assessee.

20

CHAPfERIV

THE HEARING

18(i) Grant of Hearing before Adjudication of the case.- In a customs case the Calcutta High Court decreedthe case against the Government on the ground that the dictates of natural justice had not been followed inasmuch asonly a mere "Show-cause Notice" was issued and full opportunity for a personal hearing was not given to the party.It was after this pronoul,lcementthat a specific provision was made in the "Show-cause Notice" itself requiring the

party 1.9 show his intention for a personal hearing. In departmental adjudications, therefore, if the party concerned,makes a request for personal hearing, and after such request, fails to attend on the date and place appointed for thehearing, the case should then be adjudicated on the basis of evidence available on record. If, however, the party

requests for adjournment and asks' for some other date for the purpose of hearing, it would be in the discretion of

adjudicating authority to grant the request of the party and to fix some other date for hearing if the adjudicating

authority is satisfied that the ground for adjournment is genuine. Normally an adjournment should not be refusedunless there are compelling reasons warranting such a course of action.

Under the Customs Act, 1962, the OWDt"l of the goods or person against whom the action is proposed to

be taken should be given.

(a) a notice in writing informing him of the grounds on which it is proposed to confiscate the goods or

to impose a penalty;

(b) an opportunity of making a representation in writing within such reasonable time as may be specifiedin the' notice against the grounds of confiscation or imposition of penalty mentioned therein; and

Provided that the notice referred to in Clause (a) and the representation referred to in Clause (b) may, at therequest of the person concerned be oral.

18(U) . The1>arty is required to make detailed written submission in repl)· to the show cause notice and personalbearing is basically meant to clarify what has been stated in its written submission. Consequently, it is not appropriateif the party does not give the detailed written submission while replying to the show cause notice. Moreover,verification of factual position should also be limited with reference to the show cause notice issued.

(F;No.208ISI80-CX1>dated 8th Octobrz, 1980).

19. Record of Personal Hearing.- It is necessary that a brief record of the hearing should be maintainedon a separate ~t and this sheet should be kept on the relevant me. The following particulars must always appearon the record of the pCrsonalhearing. This procedure should be followed in respect of personal hewg, if granted,lit the stag~ of appeal or revision petition also.

Record of Personal Hearing

File No. Date Time _

Messrs. ---------------------.-- _

Represented: (1) _

(2) ------(Signature) etc.

Also present (Name of Departmental Officez if any, in addition to the adjudicating officer).

I')'"

"'I)1.,1

,. U,<·I,H•• II.ill __ lIt,jll II I

.'

;OR""("\.': 1 i :,~i7<,!:,'

.He bas nothing to add.

Party reiterates the argument in his leU« dated.•••••••••••

20. AppearanceofaPleaderatPersonaIHtaring.-Infainiesstothe party and in accordance with the principles

of naturaljustice the 8lleged bffender should be allowed to Pllt his case fairly, freely and fully and if he so desires,

wUh the bclp ofa CQPDSeI.The Adjudicating authority should in his discretion decide whether, having regard to the

facts and complexity of the case WIder consideration, assistance of a legal practitioner should be regarded as partof reasonable opportunity or DOL The principle should be applied to the case as a whole and a decision should be takenon the facts and circumstances of the case as to whether a legal practitioner should or should not be aIlowed to assist

the party in the adjudication proceedings. It is, therefore, necessary for Adjudicating authorities to ensure thatlegal practitioners are not allowed to appear before them except with their specific permission. The adjudicatingauthorities should, however, be libela1 in pennitting the appearance onega! practitioners in complicated and importantcases and in cases involving heavy stakes. Care should, however be taken to see that the proceeings do not take theform of a judicial trial.

finally •

,-~!...~--. ~.' :"l.·O:','C"1't.;.;.;.;.,,-;. ··-t'

.~_._. ,.4

Pmy cootends d1at (Brief record of arguments advanced)

21

(Signature of Adjudi~ting Officer and date)

21•. Adjudicating Authority should himselrhear.- It would be inappropriate for the adjudicating authorityto delegate the function of hearing to an ofilccr subordinate to him. Apart from the question whether it would belegally correct for the adjudicating authority to hear the parties through an officer subordiante to him; the partyconcerned would not have"·full satisfaction if he is heard by an officer other than one who has to adjudge the case.Since hearing is a process·. essentially connected with the adjudication of the case it would be only right for theauthority competent to adjudicate the case to hear the party himself and to record a judgement. In personal hearings,the parties concerned should be heard as a matter of policy by the adjudicating authority himself and not through theofficers subordinate to him ..

2L~ Cancellation or personal hearings once fixed .may be avoided as far as possible. In cases, where it becomesnecessary. prior intimation of such cancellation, wherever so possible may be given to the assesseesltheir localrepresentative.

(Circular No.50185-CX.6 F.No.208/26/85-CX.6)

22. Grant of Personal Hearings in Appeal Cases:- There is no hard and fast rule that the appellant must beheard .in person or through his counsel. In personal hearings~ the parties concerned should be heard as a matter ofpolicy by the Appellate authorilj himself.

23. Grant of Personal Hearing before the actual despatch or the Adjudication Order or the AppellateOrder.- There may be cases where the adjudication order has been passed, draft approved but not despatched or thatthe order-in-appeal has been passed but not despatched. when the party concerned makes a request for personalhearing. In such cases where the party's request forpersonal hearing is received before the actual despatch of theOrder-in-Original or the Order-in-Appeal, as the case may be, personal hearing should invariably be granted.

24. Time limit ror issue or Adj udication Orders.- If for certain reasons. the adjudication orders cannot be issuedwithin five days from the date of hearing because the case is complicated, the order should be issued within fifteendays or one month from the date of hearing.

(F.No.20~/5180.CX.6 Circular No. 32180)

25. Cross-examination or witnesses in departmental adjudications: -(a) Permission to cross-examine

22

and refusal of such perm.ission:- Recent pronouncements by ,some of the High Courts and the Supreme Court holdthat in quasi-judicial proceedings where the evidence of any person is relied upon the party concerned must be given

. an opportunity to test such evidence either by cross-examination Orotht2'Wise. Since adjud.ications of Customs and

Central Excise cases are of a quasi-judicial nature, denial of an opportunity to cross-examine the Deparunent'switnesses by the party concerned may amount to violation of the principles of natural justice. The adjudicatingauthorities should not, therefore, reject requests for cross-examination of witnesse~ as a matter of course, but shouldconsidez such requests on meritS.

Adjudicating authorities should necessarily exercise caution against pennitting cross-examination indiscrimi­

·Jiately. Whae, for instance, there is a question of calling infonners for cross-examination or producing bU,sinessmen

to· substantiate the infonnation gathered from them in the course ,of confidential enquiries wheseby th~public

interest is likely to suffa, the request for cross-examination need not be conceded by the adjudicating authorities.

Similaly ,when production of witnesses would entail expense or effort notcommensurate with the value of the evidence

the witnesses are liek1y to give, having regard to the facts and, circumstances of the case cross-examination need not

be penni~ted. Othez inSwlces of this type would be cases where the witnesses are close relatives or dependents of

the party concerned whom he can produce himself, or when it is not possible to produce the witnesses at the time of

petsOnal hearing for any reason, or when the witnesses had already been examined by the party concerned during the

coUrse of any enquiry under the Customs Act, 1962. Similar other circumstances may also arise when the request forcross-examinatin need not be entertained.

In any case, the deparunent is not bound to offer for cross-examinatin any witness whose statements have not

been relied on in the show-cause notice. However, for purposes of administrative record, it will be necessary in all

Cases to record briefly in writing the reasons for refusal of the request. Like personal hearing, cross-examinatin need

not be granted unless specifically asked for by the party.

(b) Witness - who should produce - It will be the responsibility of the De partmentto produce its wi messes

whose cross-examination is permitted by the adjudicating authority. The expenses, if any, for the production of suchwitnesses will have to be borne by the Department itself (F.No.4/61/61-Cus.VI).

25A Statement recorded by PoliceOfficers· Admissibility of:- The statement recorded by Police,Officers

are admissible in Adjudication Proceedings and are not to be ruled out on the sole ground that they have been madeto officers of the Police. It would be for the Adjudicating authority in each case to examine the probative value tobe attached to the confession.

26. Cases heard by one Collector but not fmally Disposed of: Necessity for rehearing by the Successorbefore making FinaIOrder:- Whenever a personal hearing has been asked for, the adjudicating officer shouldhimself hear the party before giving the decision in the case. Where an outgoing officer had given a personal hearingbut had been unable to issue the final orders, the successor in office must offer a personal hearing again before theformal order is actually issued. It is, however, open to the party concerned not to have a further hearing after it hasbeen offered to him. In caSe other offer is not availed of by the party, the fact of the offer and its not being availed ofshould be put in writing in the appropriate case records.

(F .No. 1OO/1162LCI).

ca

4t

••••,.o

i'I~.a~

23

CHAPTER V

ADJUDICATION

27. General importance or Adjudication :. Adjudication of offences under the Central Excises and SaltAct, 1944, or the Customs act 1962 are importan t functions of the officers of the Central ExciseandCustoms competent

to adjudge offences. If an innocent person is punished or the punishment is more than warranted by the nature of

offence it may tend to jeopardise the happy relationship between the government and the public. If, on the other hand,

a real offender escapes the punishment provided by law, it may tend to encourage commission of offences to the

detriment both of the government and the honest traders. These functions therefore, cast a heavy responsibility on

the officers invested with the powers of adjudication and confiscation to use it with utmost care and caution, free from

any prejudice or bias, so that the innocent does not suffer by any injustice done to him and the real offender does not

escape the punishment provided by law. It is thus important in matters of adjudication to know and understand the

facts of a case, to process them properly, and [Q correctly apply the rules and sections of the Act or Notifications

that may be relevant to the facts of each case. Care should be taken to ensure that wrong sections of acts are notapplied to a case which attracts some other provisions of law.

28. Framing or Charges:· The following principles should be observed by the Central Excise officers in framingcharges and adjudicating offences; these principles may usefully be adopted with necessary modifications foradjudication of offences under the Customs Act-

(i) A clear distinction should be drawn between a transaction and an act; a transaction may involve

a series of separate and distinct acts of commission or omission. Thus, disposal of matches without paymentof duty constitutes a transaction which involves the commission of different acts, e.g. (I) removal without a transportdocument; (2) falsification of statutory accounts.

(ii) If one and the same ak1constitutes an offence under two or more rules, only a single penalty can beimposed in respect of that act under anyone of the rules, which the adjudicating officer may choose to apply,and not a separate and distinct penalty under each of the rules.

(iii) (a) If in the course of a ~ investigation, a number of separate and dis~ct acts are detected, eachsuch act may be separately punished in the manner provided in (ii) above.

(b) If such aCts constitute a sin~le transaction they must be adjudicated upon togethec, and whilein accordance with (a) above a separate punishment may be awarded in respectofeach such act. the total of the penaltiesin respect of all the acts together should not exceed the maximum limits prescribed for the adjudicating officer inSection 33(b) of theCenaral Excises and Salt Act. 1944

(c) .If on the other hand, the acts constitute more than one ttansaction each set of acts constituting

one ~i1Ilsaction should be adjudica~ upon separately and penalties totalling up to the maximum limits prescribedin Section 33(b) of the Central Exci~ and SaIt Act. 1944, may where necessary be imposed in respect of actsconstituting each transaction in the mannCl' provided in (b) above.

(iv) Where an adjudicating officecconsiders that a penalty exceeding the maximum limitp-escri~fochim in Section 33(b) of the Central Excises and Salt Act, 1944, is deserved in respect of acts constitUting anypariiculartran.saction, he should refer the case for original adjudication to a superior officercompetenttoadjudgethedesiredpenalty.

29. Each consignment for purpose or Adjudication or Stock taking losses to be treated as a separatetransaction:· When stock taking losses in warehoused excisable goods are to be adjudicated the difficulty arises •whether each consignment covered by a separate stock-card should be treated as a separate transaction from the otherconsignment. In such cases the loss in respect of each consignment (covered by separate stock card) would be a.separate transaction forpurposes of the principle contained in paragraph 28 and should therefore, be dealt with distinctly

24

and separately in the adjudication order. There would be no infringement of !.he provisions of Section 33 ofthe Central Excises and Salt Act, if stock taking losses are adjudicated in a single order of adjudication in the manner

described as item (ii) in paragraph 28.

30. Needfor separate adjudication order in casesinvolving more than one transaction:. In cases involving

more than one transaction a separate adjudication order should be passed in ~spect of each transaction. The mere

fact that the investigation of more than one transaction has been recorded in a single file is not sufficient reason why

a separate order should not bcissued in respect of each transaction. The issue of separate orders facilitates the separate

consideration of appeals against each order.

In cases where transactions cannQt be separated which would be very few, the appropriate course is to

(i) have them adjudicated by a higher officer who can impose heavier penalties or (ii) make an express provision

in the order of adjudication for a separate set of penalties in respect of ea\;h separate transaction.

31. Adjudication of offences to which different rules are applicable:. In cases where more than one rule

of the Central Excise Rules, 1944, can be made applicable in adjudicating an offence, tht; adjudicating officer may,

in his discretion, apply only such of the rules as may be appropriate and convenient in any particular case and ignorethe· others.

31A. Adj·,ulication of the one and the same case twice:· Adjudicating officers should guard against passingtwo formal adjudication orders on one and the same case. The legal position in this respect is that, where a matterhas already been adjudicated by the competent authority. and another order of adjudication is passed relating

to the same transaction subsequently, lhe second orderis a lIullity. The lIuthorily wholllldcrtakL's IhcclIlluiry resulting

in the second adjudication acts without jurisdiction. The second order being a Ilullity, it should be taken as not to exist

at all. When the fact of such an order having been passed is brought to light, the records should be corrected, the

order deleted from the record and the party affected informed accordingly.

(Board's F.No. 18/18/65-CXIV dt. 29.4.65)

3Z. Determination or MENS REA in departmental adjudications:· The penal provisions in the Central

Excises and Salt Act. 1944, or the Customs Act, 1962. mostly do not contain any reference to a criminal intention orknowledge. The Central Excise and Customs Department are concerned solely with those penal provisions which donot define offences triable by Magistrate. Section 33 and 122 of the respective Acts confer upon the Central Exciseand Customs Officers the power to adjudge penalties and confiscation s for contravention of certain rules/sections.In the .discharge of this function, these officers are not required to adopt the· procedure prescribed for the trial of acriminal offence or any procedure laid down by law. Such officers it has been ruled. are purely administrative. andexecutive authorities and their function is not acriminal prosecution (vide Supreme CourtJudgment in MaqboolHussain Vs. UnionofIndia). The rules and provisions in question are consequently only quasi-criminal prohibitionsenacted in the interest of revenue and defmed mostly in absolute terms without reference to a mental element (mensrea). The authority of the Statute. is, therefore. paramount and mens rea is not a necessary ingredient. Therefore. evenif mens rea 'has not been established. personal penalties as prescribed in the Central Excises and Salt Act, 1944,or the rules framed thereunder or under the Customs Act can still be imposed for any established contravention ofthe Central Excise Rules or the Sections of the Customs Act

32A. Adjudications by the detecting officers:- If the adjudicating Officer himself happens to detect the

case, he should send the case to his next higher officer even though the former is otherwise compelent to adjudicatethe same. Thus a case detected by a Superintendent though within his competence to decide. may be. sent to theAsstLCollector incharge of the division for adjudication and a case detected by the Asstt.Collector (not withinthe competence of at Superintendent but within the competence of an Asstt. Collector) may be referred to the DeputyCollector or the Collector" as the case may be for adjudication.

32B. ConfIScation or goods:·(I) The expression •shall be liable to confiscation' occurring in the Rules should notbe construed to mean that the goods must invariably be confiscated though in most cases confiscation of non-dutypaid goods should be ordered as a matter or routine. Where. however, there is no evidence of evasion of duty andthere is a clear proof that duty has· been paid, confiscation should not be necessary.

1)

t)

.,.i~r"

'ti :11,

.IJ)

t:~

"'HI'illllill

.... (2) it ~uld be made cl~ in the adjudication order that the party will be entitled to receive back thecQnf~ goods only if"be possesses a valid licence where one is required. Alternatively, he may have the goodstranSferred w a person possessing a licence; he can himself also apply for a licence if he so desires.

(3) NoH-excisable tobacco ~ucts not liable to confiscation :-Manufactured tobacco products otherthan excisable dS'Lette8 and cigars and cheroots are not liable to conftscation even if manufactured from tobaeco

on which duty has nOl been· paid, or has not been paid at the proper rate. Where such products are stored in the

premises in which they were 'n .nufactured, the penalties provided in the rules may be imposed in the followingcircumstances:

25

(a) If a wholesale dealer's licence has not been taken out in respect of the premises; or

(b) If such a licence has been taken out, (i) the licensee is unable to prove from th~ il~ounts maintained

in Form E.BJ that the~tMucts have been manufactured from tobacco on which the proper duty has been paidor (ii) such accpunts are incomplete ,)r incorrect in any particular or (iii) the licensee has committed a breach ofthe terms of licence.

33. Time Schedule ror expeditious adj. '!ication or offences and seizure cases:- (a) In order to effectexpeditious disposal of the Central Excise of1.'.·;;es, the following schedule should be observed.

(i) All reports of arrest, search or seizure :;:lould be submitted to the immediate superior officer within24 hours of the occurrence. The detecting officer should submit the case file to the adjudicating qfficer within sevendays from the date of dl •. ::tion. If, for any reasons, it is not possible to complete investigation within seven days,he should submit a report to the adjudicating officer giving reasons and indicating therein tile period of extensionrequired by the officer.

(ii) :ifa case falls beyond the comp~nce of the officer to whom such case has been submitted, it should besubmitted to the proper adjudicating officer witllin seven days of the rCt;eipt of the case by the former.

(iii) The adjudicating officer should wherenecessary issue the 'show-cause notice within five days of receiptof Jlt~case file. Normally one month time is allowed for the party to reply and this period should be specified in thenotice. If no reply is received in about45 days, the case should be decided if necessary, :: parte. If,however, the case is defective in anyrespect it shouldbe returned to the proper officer within five days llJ,d a period not exceeding seven days normally should be fixedfor re-submission of the case file..

(iv) Cases should be> adjudicated within five days from the date fixed in the show-cause-notice for reply.If person~~hearing isreque ted by the party, the date should be fixed within seven days from the date of receiptof the reN from the party and the case should be adjudicated within five days from the date of hearing.

(v) The confiscated goods should be permitted to be redeemed in accordance with the provisions ofpara6f3ph 55B. if the goods are not re-deemed they should be disposed of in auction within one month from the dateo expiry of the period fixed for redemption of goods.

(vi) Effective steps should be taken to ensure that the goods do not remain in a state of seizure for morethan 4 to 6 weeks.

(b) Supervisory Officers like Assistant Collectors, Deputy Collectors and Collectors should keep a specialwatch during their inspections to see how c:osely the time-table has been maintained. These officers should alsomake detailed scrutiny of SQllIeof the cases which are being long delayed in order to give suitable directions to thesubordinate officers for dealing with the cases mere expeditiously.

(c) The procedure contained in this paragraph should alsobe followed mutatis mutandis in respectofCuSlOOiSCases.

34. Form or adjudication order in Central Excise Cases:- (i) All adjudications should be in Lie following .form and should invariably contain a clear direction setting out the procedure of min~ an appeal as contained in

UP

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, ''"I)1",/

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Collector of

e 'filed within

of Rs .

35. Demand for central Excise Duty on confiscated goods not to be included ill the body of the adjudicationorder:- In respect of those goods which are confiscated and an option for the redemption of the goods by the

(iii) While discussing the facts of the case in the order of adjudication the daleS of occurrence or anyimportant happenings that may fonn important link in the facts of the case, the places of occurrence, the designationof the officers who seized the goods etc. or have any other relevance to the fact; of the case must be specif1C3llyslated in the order of adjudication. In short an adjudication order would not he CC'nsidered to be' complete­unless it answers the questions-what, who, how, when, where and why?

N.B.(I) This copy is granted free of charge for the private use of the pl,-son to whom it is :ued.

(iv) General principles of adjudication set out in sub-paragraph (ii) & (iii) above should be followedin .respect of CustOms cases as well.

26

(F.No.40n4/65-CXI)

QRDER (ORIGINAL)

(ii) If such amount or value exceeds fifty mpites.

(i) if the amount or value of the subject matter is fity or less than fifty rupees .

(a) a copy of the appeal,(b) this copy of the order, or another copy of the order. which must bear Court Fcc StaJnI :isbelow;

Rule213read with Govt. oflndia, Ministry ofFinan~e(DepartmentofRevenue) Notifications No. 6915 "JoS.R.No.8/

22) dL 18.7.59.

(2) Any person deeming himself aggrieved by this order may appeal Jgainst the same to '

Central Excise (Appeals) Customs, Excise and Gold (Control) Appellate Tribunal. TI.e appeal m'tjS'

3 months from the date of communication to him of this order and it should bear a court Fce Sunonly. It must be accompanied by

(v) A direct penalty may be adjudged in addition to the confiscation of the goods if the merits of thecase so warrant Orders of confiscation should, however, invariably prescribe an amount of fine in lieu of confISCationas required by Section 34 of the Central Excises and Salt Act; the amount of such fine s.,houldnot exceed the value('value' here means ex-duty value) of the goods.

ORDER

(ii) An original order of adjudication should be self-conwned and unambiguous. The order shoul~quote the Rules or Sections violated, discuss in brief all the contentions put forw~d in defence, and indicate clearlyan the groundS on which penal action has been taken and should be closely reasoned. In all such proceedings it isnecessary that there should be a charge (offence against the relevant law), a finding and establishment of the

charge of offence supported by proper evidence, as a foundatioa for imposin~ any punishment. It should-

(a) briefly state the essential facts of the case and the issues involved,(b) discuss each issue separately,(c) specify the Rules or Sections of the Act which are held to have been contravened, and(d) specify the Rules or Sections of the Act under which the penalty is imposed or the goods confIScated.

(3) Any person desirous of appealing against this decision or order shall, pending the apl'C' .ieposit the duty

demanded or the penalty levied therein and produce proof of such payment alongwith the apf I, failillg whichI

the appeal is liable' to be rejected for non-compliance with the provision of Section 35P of the C( .ral Excises and

Salt Act, 1944/Section 129 of Customs Act, 1962.

SUBJECT

,27.

I '. \" ".- ~ .. , . t, f" , t (.

owner on payment of fme in lieu of confISCation has been given and sll¢h goods are alsO 'adjudgCd to be liable~ropay. 11 • "'C- .', - ,~

the Central Excise duty •the demand for such duty should not bem~a partoftheadjudication order i.e~.such demand

should not be made a part of the order of confiscation itself. In such cases a separate endorsement on thefonowinglines may be made in the forwarding memo:- '

"The goods are dutiable and proper duty will have to be paid before they areclwed.~

Officers should. however, take care that the need of insIsting upon recovery of duty on the goods concernedbefore their clearance will not arise in those cases where the facility for warehousing the goods-confiscatcd andredeemed - is allowed.

36. Offences punishable under the Central Excises & Salt Act 1944 not subject to departmental

adjudication:- Offences against the rules made under Section 37 of the Central Excises and Salt Act, 1944 can beadjudicated upon by a competent Officer und& Section 33 of the said Act. If however, an offence does not involve

contraVer.llcn of any of th~ C~tral Excise Rules but is otherwise punishable under a section of the said Act, such

an offence is outside the jurisdiction ot departmental adjudication ~,m!is tri~ble by a court of law. For example, ina case where excisable goods have been unauthorised1y removed without payment o( duty, from a place wtk.'"'re

they are produced, cured or manufactured, action can be taken departmentally against the producer or manufacturerunder Rule 9 (2); if, however, the Department decides to proceed against such a person for evading the paymentof excise duty then the offence would fall under Section 9(b) of the said Act and hence outside the scope ofdepartmental adjudication.

36A. Distinction between conr~cation under the Central Excise Rules., and forfeiture by a Court underSection 10 ofthe Central Excises and Salt Act:- In a departmental confiscation the officer is bound to give an option

• to the offender to redeem the confiscated goods by paying a fine in lieu of confiscation but the forfeiture togovernment ordered by a Court is absolute and unqualified.

37. 'Whether warnings are punishmen ts under Section, 33 of the Central Excises & Salt Act,. 1944:- Therehas been a practice in some Central Excise Collectorates to administer warnings in certain small cases of offencesagainst Central Excise Rules and such warnings have been issued in regular adjudication forms. This is a wrongpractice. Since there is no provision either in the Central Excises and Salt Act, or the Rules made thereunder regardingwarning, they are not punishments within the meaning of Section 33 of the said act. To administ& a warning is purelyan administrative act and, therefore, is also not appealable. Warning therefore, should not be included in a formaladjudication order under Section 33 of the said Act, but be issued in a simple memo form if administration of sucha warning is at all considered to be necessary.

38. Quoting of Rules and the method of calculation of differential duty i,n Demand Notices:-Issue ofdemand notices for differential duty is not an act of adjudication, yet it is considered necessary to caution theoffJCeISagain.st omission of the relevant rule under which demand is made and of the method of calculation of such duty.These omissions sometimes are challenged at appeal stage and become an unnecessary subject-matter of legalarguments. Although the mere omission of the rule in the demand notices does not by itself vitiate the demand if thedemand is otherwise sustainable under the law yet such omissions may lead to unavoidable and unnecessarycorrespondence with the parties concerned who may like to know the rule under which the demand for duty is made.All officers, while issuing the demand notices for differential duty should, therefore, take care to safeguard against

such an omission. The relevant rule or rules under which the demand for differential duty is made and also theparticulars including the quantity of goods and method by which the demand has been computed must always be quotedin the demand notices; care should also be taken to quote correct rules.

39, Quoting of number and date of Board's orders in correspondence with the trade: The numberand date of circular orders of the Board or of the Minislry of Finance (Deptt of Rev.) other than those which arepublished such as notifications, etc. should not be cited in the circulars/instructions, which are issued to the trade bythe Collector of Central Excise or the offIcers subordinate to him. There has also been an unwholesome practicein certain Central Excise Collectorates to quote the number and date of the Board's letter in certain correspondencewith the trade. The Central 'Board of Excise and Customs in addition to being an executive authority is also anappellate authority. On many occasions the Collectors of Central Excise ask for certain clarifications from the BQard.

either on points of law or interpretation of rules. Sometimes references are also made whether in' pariicUJ8r ,

circumstances of a case refund of duty mayor may not be granted to a party. The Central Board of Excise and C.H,~r,.£.,£; "';~ :"'t:;:"l',~ ,,;·t~,~-;

J!

I '

28

decides thesemattezs and issues directions in its capacity as an executive authority. The Collectors and the

offICerS subordinate to them while rejecting the claims of refund or other requests of the trade quote the number anddatC of the Board's letter. The communications that are issued by the officers to the trade have been found to

be somewhat on the following lines.

"The Centtal Board of Excise and Customs has been pleased to direct that or has been pleased to reject theclaim of refund of .... etc ..... etc."

All orders, in such matters even if they are issued after taking advice from the Central Board of excise and

Customs should"be issued in the name of the Collectors or its subordinate officers as the case may be and the letternumber and date of the Board's Office should not be quoted therein unless a specific penn ission for doing so in anyparticular case is obtained from the Board. Since any order or decision taken by a Central 2xcise Officer is appealable

unclez Section 3513SB of the Central Excises and Salt act, 1944, quoting of Boards letter number and date in any orders

issued by the Collectors or their subordinates and communicated to the trade may create legal complications in the

maUtl of jurisdiction if the party concerned files an appeal against such orders. All the Collectors of Central Excise

and &be Officers subordinate to them should, therefore, strictly follow the instlVctions contained in this p~~yh.

~ "'~'.' ~Whtroarefticiice has been made by the Board/Department of Revenue to the Law Ministry for any advice/

opinion, such advice/opinion should be treated as "confidential" as it is intended only for the use of the Government

only. It should be ensured that the advice/opinion of the Law Ministry is not quoted on any order passed by any

8djudicating authority. In order to maintain the necessary degree of secrecy the advice/opinion should not be

communicated vezbatim as a matter of course even to the field formations by the Collectors. How this is to be doneis of course left to the discretion of the Collectors themselves.1l should also be ensured thal il is not communicated

or allowed to fall into the hands of the trade in whatever fashion.

40. Observance of Principles of Natural justice in DepartmentaIAdjudioations:- (1) The principles of naluraljustice required to be followed in depmuoental adjudication have already been stated in Chaplers III and IV. However,

at the time of actual adjudication of the case the officer adjudicating it should ensure before the order is dispatchedthatalllhe principles of natural justice have been followed and that'no defect on this account remains in the orderbecause if any of those principles is not observed the validity of the adjudications may be challenged on that ground.

In a case the Madras High Court passed judgement that as the adjudication order passed by the Collector of CustomsMadras was inconsistent with the principles of natural justice, the adjudication proceedings were vitiated by non­observance of those principles. In order to make the position clear to the officers it would be better to state the casein brief. The case was ·that MIs. Rainbow Trading Co. Bangalore, imported certain consignments of electric bulbsunder the guise of "electrical goods". As a result of enquiries made in the open market and tesl of thP,representativesamples ~wn from the consignments by the Madras Institute of Technology and the College of Engineering,Gundy, it was held that the bulbs imported were not different in any respect in their construction of filament fromthose of flash light bulbs for torches. The Collector while adjudicating confiscation of the goods referred in theadjudication order to the result of the aforesaid test. Since, however, the party was not given an opportunity to rebutthe result of the test, the High Court held that this fact, being inconsistent with principles of natural justice, vitiatedthe adjudication ordel'. The position might have been different if the Collector had not quoted the result of the testin 1he adjudication ordel'. The result of the test should have been used by the Collector for his own infonnation onlyin.arriving ai a proper judgement without quoting the same in the adjudication order. In cases, therefore, where1hcCoUccliOror any other departmental adjudicating authority makes a confidential enquiry or receives secret sourcesofiaforma&ion, it is best not to mention them in the order of adjudication, such secret infonnation should

'., k used as a guide for further investigation and no material can be relied on to support a finding unless~.pIIIy"bad an opportunity to rebut the conclusion that flows from said material or bring forward other material

:.•••.•• ,..~ AD adjudi('a~D& OffiCers should. therefore, bear in mind that no material should be quoted in cbc, r ,1' -~~ Clftb __ b ••• beat relied on to support a finding against the inauests of the party unless dlc perty••••• pYCft lID opportunity to rebut that material.

(2) ~.ds takell from the order passed by Shri B.K.Agarwal, Director(audit) qaiut Mis. rre LtAL

17.1 Before parting with the case, I must also discuss the company's arguments regarding principles of naturaljustice and burden of proof. The company has submitted that the princip les of natural justice import within it a primerequirement that wiblesses whose statements are sought to be relied upon by the authority holding the enquiry, should

"""'1.:,'

,"

29

:'... '~. " .. ':., ' '~"\ \r'_I, ."j,:f': "-";',';,~~;\')

be,permiUcd to be c:ross-eumiped by the party affected. This is an extremely 'weU,Settled .xwtiqn in law onthC,P1'OnowtcementoftheSupremeCowt, High Courts and the Appellate Tnounal.Forinstancein the caSe ofKiSl1and1IDd

CheeUiram AIR 198O,S.C. 2117,·the Supreme Court has held that wiblesses whose ~ents have been relied upon

by the Department have to be produced for ~amination and a failure to produce the persons for ~::,examination results in a denial of a reasonable opportutiity .to show cause and the orders passed by the assessing

authorities being in breach of the principles of natural justice are bad ab initio. Similarly, the Delhi High Court in

its judgments reported as 1978 EL.T 500 and 1978 EL.T. 502 has held that failure to produce .persons for cross­examination toestablish ~e truth/falsehood. vitiates the order passed by the excise authorities as it is passed in breach

of principles of natural justice. Similarly, in the case of Walker Anjania Vs. CollectorofCentralExcise, the AppellateTribuncl also has held that the person must be produced for cross-examination and failure to so produce them is

a violation of principles of naturaljustice. The Company submits that in the alternative, the statements and documentson which purported reliance was being placed if not proved. in accordance with the law by tendering the wiblessesfor cross-examination, shall be diFegarded. Further, it is well settled in law that the burden of establishing the essential

ingredients of taxation is on the department and this burden has to be discharged by producing satisfactory evidence.

17.2. I have giyen careful consideration to the above submissions. There cannot be two opinions that observance

of th~ principles of natural justice in quasi judicial proceedings is a must. In the City Comer's case - AIR. 1976 s.c.143. the Court observed t.ltat it is now well established that observance of principles of natural justice is the

requirement of law even where the statute in question itself does not so provide. However. it is also well establishedthat the principles of natural justice do not necessarily conform to a fixed formula, nor IS it procrustean bed intowhich all proceedings must be fitted. In 1977-CRI-LJ (NCCI56): 1976 Ker II 660 the Court observed that rulesof audi alteram partem are not neatly cut and dried or nicely weighed and measured. What is a fair opportunity mustof necessity depend upon the facts and circumstances of each case, the constitution of each tribunal and the provisionof law ~pplicable to it The requirements of natural justice thus vary from case to case and they are not rigid or

fixed rules. Similarly. in 1976 Cri.D(N0C)67:1977 JSCTL147 (Cal.) the cong held that the principles of naturaljustice do not require that there should be a kind of formal cross-examination and formal cross-examination isprocedural justice. The evidence of the persons on which the authorities relied rested mainly on what transpiredon the inspection of the car and on records. Thepetitioners had opportunity of offering their explanations withregard

to the same as the entire evidence was sought to be made available to the petitioners who were allowed to haveinspection of the same and also take copies of the same. Any formal cross-examination of the said witnesses couldhardly improve matters and refusal of the right to cross-examine the witnesses formally in the facts and circumstancesof this case did not constitute any violation of the'principles of natural justice and did not deprive the petitionersof any reasonable opportunity of making their representation.

17.3 In thecaseofMahendraNathChatterjeevs. Collector of Central Excise andothers-1977TaxLR 1754­1977 CENCUS 43D-Calcutta High Cowt observed that the me.e fact that the petitioner was not given an opportunityto cross examirie was not violative of the principlesofnaturaljus'tice. The right to cross-examine is not necessarilya part of reasonable opportunity. Whether in a particular case a particular party should .have the right to cross­examineornotdepends upon the facts and circumstances of the case and it very largely depends upon the adjudicatingauthority who is not guided by rule of evidence as such. He must, however, afford such opportunity as would ensureto the party concerned proper opportunity to defend himse~f. It is well known that in these matters the revenue exciseauthorities are entitled to make their independent enquiries and to rely upon such enquiries provided the result ofsuch enquiries are communicated to the person concerned against whom such enquiry is sought to be relied on andhe is given an opportunity to rebut or contradict any evidence adduced by such enquiry.

17.4 In the Case of Kishan La! Agarwalla vs. Collector of Land Customs A.I.R. 1967 Cal80, the Calcutta HighCourt made the following observation.

"There is a good deal of misconception on this question of right of cross-examination as part of natural justice.Natural justice is in fact becomi1'lg the most unnatural and artificial justice and for that confusion the courts are noless responsible than the litigants. Ordinarily the principles 01natural justice is that no man shall be ajudge in his owncause and that no man should be condemned unheard. This latter doctrine is known .lWdialteram partem. It is 0]1

this principle that natural justice ensures lhat both sides should be heard fairl y and reasonabJ y. A part of this principleis that if any reliance is placed on evidence on record against a'person then that evidence or record must be placedbefore him for his information comment and criticism. That is all that is meant by the doctrine of aud; alteram1lWm, that no party should be condemned unheard. No natural justice requires that there should bea kind of a formalcross-examination. Formal cross-examination is procedural justice. It is governed by rules of evidence. It is the

30

creation of Courts and not a part of natural justice but of legal and statutory justice. Natural justice certainly includes

that any statement of a person before it is accepted against somebody else, that somebody else should have an

opportunity of meeting it whether it is, by way of interrogation or by way of comment does not matter. So long asthe party charged has a fair and reasonable opportunity to see, comment criticise the evidence, statement or recordon which the charge is being made against him, the demands and the test of natural justice are satisfied. Cross­examination in that sense is not the technical cross-examination in a court of law in the witness-box. If the

Collector of Land Customs were to convert himself into a regular Court of law hearing formal cross-examination andapplying the Evidence Act and the Civil and Criminal Procedure Codes in this manner as Court of Law then of courseit will be physically and literally impossible for him to function as Collector of Customs."

17.5 The above view point was reiterated in another judgement of the same High Court in Matter 446nS dated

11.2.76 wherein their lordships observed-"in the instant case of non-production of the witnesses for formal cross­

examination by the petitioners at the enquiry does not, in my opinion, constitute any violation of the principles of

natural justice and does not amount to a denial of reasonable opportunity to the petitioners. The gist of the evidence

of this person on which the authorities wanted to rely in the instant case had be.en communicated to the petitioners

and the petitioners were also allowed the opportunities of inspecting the entire records and of making copies of

the same. It cannot, therefore, be said the adjudicating authority relied on any material which was not made available

to the petitioners. It was essentially for the petitioners to offer their explanation with regard to the statement of evidenceand the petitioners had ample opportunity of doing so. Principles of natural justice do not require that there should

be a kind of a formal cross-examination and formal cross-examination is procedural justice."

(3) Grant of personal hearin be~ ...i ore a refund claIm ISrelected/modified.

Where under Section lIB of the Central Excises and Salt Act, 1944 a refund claim (including a rebate claim) is

sought to be rejected or modified, it is necessary for the Asstt. Collectorto comply with the pnnciplesof naturll j~<;t1rc.Hence, all cases of rejection or modification of refund claims should be decided after issue of show cause notice

and/or grant of personal hearing. The adjudication ordcrp~sscd in such cases should he a speaking order clearly stating

the grounds on which the refund claims has been rejected or modified.

40A. Recommendations by the office Assistants or other Subordinates for the final decision oftht! cases:­

An officer when adjudicating a case under the Central Excise Act and Rules or the Customs Act, acts in a quasi-judicialcapacity and that he should, after the enquiry, take an unbiased decision in each case applying his own mind to thematerials disclosed in enquiry independently. From this point of view, any positive suggestion in regard to thepenalty etc. whether in an office note or elsewhere is liable to be regarded as an interference with the functions ofthe Adjudicating Officer there\)y vitiating the decision .. Office notes should not, therefore, go to the extent ofrecommending the final decision or the actual penalty, in the adjudication of offence cases.

40B. Passing of conditional orders in adjudication and appeals:·ln cases where some verification is requiredto be carried out by the field formations and which is likely to affect the very nature of the order, conditional ordersshould not be issued and in such cases the adjudicating/appellate au$ority should first get the facts verified and passorders thereafter. However. in cases where the verification required by the field formations is only of a formal orarithmetical nature and is not likely to affect the basis of the order, the conditional order could be issued.

41. Determination of competent adjudicating authority in cases where the Excisable goods are non­existent on the question whether value of such goods or Magnitude of orrenre should be the Criterion :- The

value of goods is not relevant for the purpose of determination of the competence of the adjudicating authority whenit is not proposed to confiscate the goods either because the goods are not available for confiscation or for any otherreason. The amount of penalty to be imposed must, however, be within the powers of that authority. TIle value ofgoods involved; no doubt, may be criterion for imposing a heavier penalty and if the proper amount of the penalty isbeyond the competence of the authority concerned, the officer should refer the case to his superior with a fc~"'Wardingnote to that effect

42. Whether on transfer of the officer who recorded decision on the file his successor can issue the formal

order of adjudication without rehearing the party:- When an adjudicating officer is likely to be transferred orpromoted, it should be ensured that in all cases, where a hearing has been given on request, but formal orders have

not been issued, the drafting of these orders is also on a top priority basis so that formal orders in all such cases are

:)

')

31

issued by the outgoing officet before relinquishing charge. If despite this precaution, odd Cases remain .undisposed

of, the successot in offICe should offer a fresh hearing to the party as mentioned in Para 26 before issuing the formal

order. A special mention of such cases should be made in the handing over notes of the outgoing officer so that theydo not escape the notice of the successor. (F.No. 100/1/62 L.C.!.)

43. Provisional release of things seized pending adjudication on deposit of security-execution of bond· (i)

According to sub-rule (3) of Rule 206 of Central Excise Rules 3Ilything seized by a Central Excise Officer, may,

pending the orders of the adjudicating Central Excise Officer, be released to the owner on taking a bond from himin dte prop~r Form, with such security as the Collector may require. As prescribed in the said "rule, seized goods,

irrespective cfthe value thereof, can, pending adjudication" be released to the owner, if he so desires on taking

a bond from him in Form B-Il (Sec.) with sufficient security. As a working rule, the option to take delivery of the

seized goods before adjudication or to leave the goods in the custody of the Department till adjudication, should

be left to the owner .If, however, the officer competent to grant release under Rilles 206(3) 1hinks that by releasing

the goods provisionally some important evidence material and relevant to the case would be lost, such officer may,

in his discretion, refuse to grant such release. This procedure should be made known to the party concerned every

time a seizure is made and the two altemati ve modes of dealing with the seized goods should be specifically broughlto the notice of the owner, soon after the seizure, by the seizing authority. A practical difficulty may arise whenat Lhetime of adjudication, it is felt necessary by the adjudicating authority to confiscate the goods in question, ifthey had already been released to the owner. The question will then arise as to how goods which have already beenreleased and which are no longer in the custody of the Department can be formally confiscated. In order to overcomethis diffIculty the adjudication order may contain inter alia, the following:

" that the goods are liable to be confiscated but as the goods were released provisionally to the owner,. before Adjudication, the owner was asked to produce the goods in terms of the bond within .... On his failure to produce

the goods in terms of the bond I appropriate an amouDtof Rs towards duty Rs towards value, Rs to1Vardspenalty andRs :.. towards other charges due on the excisable goods released. The balance arnountofRs .is ordered to be refunded."

(ii) The power of the Collector to release seized goods pending adjudication on execution of bond inForm.B.II(Sec.) with suitable security under Rule 206(3) of Central Excise Rules has been delegate<! to officerscompetent to adjudicate the case. The bond, should however, be accepted by the Superintendent of Central Excise.The competence of the adjudicating offIcer should be determined with reference to the value of the goods liable toconfiscation as a whole including vehicles used in the transportation of goods, notwithstanding the amoWlt of

fine (in lieu of confiscation of the conveyance) which may be fixed by the adjudicating authority. (F.No.35/11165­eX!). ~ OffIces releasing the goods should take care that, while determining the amount of the deposit they bearin mind the seriousness of the offence, the value of the goods seized and whether the goods are duty-paid or noLCare should also be taken to ensure that by releasing the goods some valuable evidence in thccase is not extinguished.

(iii) Considering the inconvenience to the parties and the department in the case of petty seizures, the goodsmay be released provisionally by the detecting offIcer himself in cases where the value of the goods does not exceedRs. 50. The provisional release can be ordered by the Inspector or Superintendent in charge of the Range subjectto the conditions that the owner of the goods makes a deposit equal to the probable amount of duty and other chargesleviable thereon, and also give an undertaking similar to clause (c) of B.ll (Security) Bond on the receift given byhim for the provisional release of such goods, pending adjudication (F.No.8/4/62-CX.m ..

44. Power or adjudication or Central Excise Officers ;. The officers mentioned in CoJ.2 of the table belowhave been authorised to exercise the powers indicated in Co1.3 under the authority quoted in CoJ. 4 thereof:

S.No. OffIcers PowersAuthority

1.

2. 3.5.

1.

CoIIector of C'..enualExcisePowers indicated in clauseSection 33 (1) of C.Ex. & Salt Act,

(a) of Sec. 33 of the ACL

1944.

2.

Deputy CoIIector of CentralPowers indicated in clauseC.B.R. Notification No. 12-C.Ex.Excise

(a) of Sec. 33 of the Actdt. 17th May, 1947.

~

~•I!•o•G

(tIIa)

fill)~I

",,)'I'·:·'

'H" " ..I"'i'\·" ••• ·,"'·· tI""t""'T'UI I"

(4)

C.B.R. Notification No.8-C.Ex .

dt. 2nd Sept., 1944

C.B.R. Notification No.93/59 dt

28.11.59.

(3)

32

-do-

-do-

I~W., ",,,.,,,.,., "' ••. ,,, ••••.•••.• __ •. _

(2)

1';;110111•• '1'11'1' 'II' ~!fl 1f11ll1 ;'~'J:l111:11lf1l1111"

loss of goods, where the loss occurs in transit from a factory to a warehouse or to another factory,or from one warehouse to another, or during the course of processing of the goods in a warehouseor in storage, whether in a factory or in a warehouse;

a rebate of duty of excise on goods exported to any country or territory outside India or on excisablematerials used in the manufacture of goods which are c;(poned to any country or territory outsideIndia;

goods exported outside India(except to Nepal or Bhutan) without payment of duty:

(a)

(b)

(c)

Supdts. of Central Excise

. Assistant Collector of Central

Excise

(1)

S.No. Rank of offICers Amount of duty involved-1.

CoIlco&or Power indicated in clause (a) ofSection 33 of the Act2.

Additiooal CollectorRs.2Iakhs.

3.

Deputy Collector Rs. One Iakh

4.

Asstt. Collector Rs.2S,{XX)/-

1.

Superintendent Rs.5,O<XJ/-

3.

4.

The power of adjudication would not be those as detailed above in (A) and (B), but would be as under:-

(C) Where the case to be adjudicated relate to :-

(B) Where there is no alleged or potential evasion of duty, all cases would be decid~d by the Divisional AssistantCollector. The penalty imposed should depend upon L;e gravity of the offence and should also be such so as to act asa deterrent for future.

.4!.\R~trictiODS in ~e pOwer of adjudicat'io~ or CeJltral Excise Officers:- (i) The Central Board of Excise and

.~'. AAv~'.~ .tlull.~pO"Yer: of~judicati9D .~cmr~.11$ indicated in the preceeding paragraph, on the0lt1CCrS of Cenilal Bxci$e should, for the present., be Cl3leldsed only to the extent indicated below.

,NO:I:a: Where there is a series or set of connected cases the amount of duty involved for detennining jurisdictionwill be caleula!ed with reference to the entire series or set of connected cases.

Except for Collector of Central Excise, the Central Board of Excise and Customs, by virtue of their executive

authority undertbe proviso to Section 33 oftheCentra1Excises & Salt Act, 1944, have limited theactualexercise

of. ~" powers of lhe. Deputy Collectors. Assisqmt Collectors and Superintendents of Central Excise as set out in,tho succeeding~8I:aph. In 8Ctwll p~ti~e"U1e.retore, these officers should exercise their powers in the restricted

..~8bOwn'~.tbe ••extparagtaph. ,., .

_....•.. ,;.,.·.i:, - " 'I -., '. l

(A) Where thcro is alleged or polential cvasiooo of duty tho powers of adjudication will be as under :-

".­,(Ii

While wOlting out tAieamount of duty involved, aggregate of all duties of excise should be taken intoconsideration.

Rank of OffICeI' •

Dy. Collector'

Assistant Collector.

33

Amount of duty involved.

Without limit

Upto Rs.20,OOO/-

(0) Enhancementor powers or adjudication of Additional Collectors.

Consequent upon the JUnendment made to Section IIA on 21.12.1985, the following Instructions were issued

by the Board:

i)f.No.~5-CX.I n.ted 30.12.1985ii)F.No.208l4I86-CX.6 Dated 19.9.1986iii)p.No.~1R7.cx1 Dated 21.7.1987

T1lese iastruclion$ required only the Collectors 10 issue and adjudicate show cause notices wheneverallegations oCsuppression or mis-declaration of facts. fraud,collusionetc. were made in the show cause notice. 11leseinsCructions resuhed in the transfer of alariC number oCadjudication cases from subordinate officers to the Collectorsdue 10 which they could not devote ¢cquate time and attention to other technical and arlministrative matters.

i. The matter has been considered by the Board. Since the definition of a Collector of Central Excise includesthe Additional Collector of Central Excise al~, it was felt that show cause notices in the above cases could also be

issued by the Additional Collectors.. It has therefore been decided by the Board that henceforth Additional Colectorsmay issue and decide show cause notices under section IIA and under rule 9(2) in those cases where an allegationof suppression of facts misdeclaration fraud, collusion etc. has been made and the duty involvement is not morethan Rs.5lakhs. Cases where the duty involvement is more than Rs. 5lakhs would continue tO,be dealt with at theCollector's level

I 3. Board's instruction F.No.4/20185-CX.I dated 30.12.1985, F.No.208t4186-CX.6 dated 19.9.1986, F.NoAf3t

\ 87-CX.I dated 21.7.87, F.No.20813185-CX.6 dated 26.3.1985 and F.No.202/26/85-Cx'6 dated 12.5.1987 may bedeemed to be modified to the above extent

(F.No.208t45187-CX.6 dated 7.4.88)

(ii) Composition of offences: - The Collector or such other officer to whom the powers of Collector under Rule21O-A of Central Excise Rules, 1944, may be delegated, may accept from any person whose property is liable toconfiscation under the Central Excises and Salt Act, 1944,orwhoisreasonablv suspected of having committed anoffence under the said Act or under the Central Excise Rules, a sum of money not exceeding Rs.2,OOO in lieu ofconfiscation of goods or of punishment for breach of any provision of the said Act or of the said Rules, Compoundingis a kind of an agreement between the two parties (here the department and the person concerned) to settle a matterby mutual consent, the person concerned as well as the department lose their further rights, if any, conferred by theAct or the Rules - the former loses the right of appeal conferred by section ,5of Act and the latter the right of institutingany proceedings agamst the person in respect of the COmpounded offence. Since an order of com position of an offenceis not appealable under Section 35 of the Act, officers should take care that the usual preamble to the AdjudicationOrder is not included in the order of Composiuon of offences issued under Rule 21O-A. Similarly it should also benoted that the usual show-Cause-Notic~ is not issued in respect of matters relating to composition of offences,

the form prescribed in"Appendix IV should be used in such cases. Officers should be careful to see that the sumof money offered or accepted to compound an offence is adequate tojustify compound offence because once an offence •is compounded under Rule 21O-A no penal proceedings against thepacty in respect of that offence can be instituted.The offer of composition of an offence mayemanatc either from the party or from the department. Where,however,the offer of composition of an offence is made b)' the department, the sum of composition money ~cceplable tothe department must bementioned in the notice issued to the person concerned in order to enable him to decide whether

:)

Amount of Composition fee that

can be accepted

Not exceeding Rs.1500/­

Not exceeding Rs.750/­Not exceeding Rs.2501-

Without limit

Not exceeding Rs.5000/­

Not exceeding Rs.1000/-

Value of goodsRank of Officer

Deputy ColleclorAsstt Collector

Superintendent

(F.No.21018186-CX.6,24.2.1988

(Cir.No.13188)

3. Pending cases may now be disposed of on lhe basis of these instructions.

, .47. Despatch of Adjudication Order by Registered Post Acknowledgement Due:- (1) Every adjudicationorder should be sentto the party concerned by registered post acknowledgement due and lhe acknowledgement receiptwhen received should be kept on the relevant file. If there is any unreasonable or undue delay in the receipt of theacknowledgement of the party, the matter should be taken up immediately wilh the Post Office concerned.Acknowledgementreceiptofthe party is an important document as it shows lheaclual dale of receipt of the adjudicationorder and computation of the period of appeal is to be made from this date.

46(2) Proper officerfor sanctioning. sugar rebate:- Cases have come to the notice of the Board where sugarrebaleS

have been sanctioned by the Chief Accounts Officer, Sugar rebate is a refund for Central Excise purposes and as per

senction 11B of the Central Excises and Salt Act, 1944, it is the Assistant Collector who is the authority for sanctioning

such refunds/rebates.

It may be mentioned that Rule 21O-A gives power to accept a sum of money not exceeding Rs. 2,000 in lieu

of confiscation of property or of punishment for breach of any provisions of the Act or the Rules. Under this Rule the

Collector does not accept the sum of money in lieu of the duty payable by the person with whom the composition

is made. The liability to pay duty does not therefore cease with the composition of the offence.

(F.No.21O/47187-CX.6 dt.28.l2.1987.Cir.No.46/87

Therefore Board desires that henceforth all sugar rebate claims should be sanctioned only by the jurisdictionalAssistant Collectors of Central Excise.

I

2. The matter was referred to Law Ministry who have opined that refund wouldnot be admissible once the duty hasbeen paid. The Board has accepted lhe advice of the Law Ministry.

46(3) Refund under Section nC-Instructions regarding:- A case has come to the notice of the Board whereina notification under Section 11C was issued not to collect duty for certain period in accordance with the general practiceof non levy of duty on an excisable product. However some assessees had paid the duty on the product during therelevant period. The question that arose was whether the assessees who had paid lhe du ty would be entitled. for refund.

46(1). Proper Officer Under Rule 9:- Where the extended time limit of 5 years is in yoked under Rule 9(2), the

proper officer would be the Collector of Central Excise. In other cases where the nonnal time limit of six months

is invoked, the cases would be adjudicated by the proper officer as given in para 45 above.

34

it would be worthwhile for him to have the offence compounded for t'te sum of money mentioned in the notice.

The following officers are authorised to compound the offences under Rule 210-A.

(2) Instructions should be issued by lhe Collector to the staff lO keep a proper track of acknowledgmentcards when received back from postal authorities and for placing them in the proper files on their receipt in order tohave a record about the dates of actual receipt of the Adjudication Orders by theparties. For the sake of immediateidentification of such acknowledgment cards, the concerned branch may stamp such acknowledgement due cards

S.No.

'I.2.

3.

3S

ifiilic;tlJ1f'CenttalHxciseAdjudication Branch'. cCustoms~djudication BlJIlch or 'Oold ConttolAdjudication

Branch' at the time of despatcli so that 'ta~eC&.«tS whee recelvP.,d ~k ftom the postal aulhorities may be delivered

to the branches CODeetned immediately on their receipt It is felt that the practice of $Clv1ng tOOAdjudication Order

through the postal authorities UU',y be continued. However, in important cases the Collectorl Additionai CollectpI'

can decide that the Adjudication Orders m~y be servoo through· the local range offices. It may be mentionedthat in such cases, another copy of the order should not be sent through postal authorities in order to avoid confusion

as regards the date of actual receipt of the order by the party which is very much material in case an appeal is rued

by the party. But, a proper receipt signed by 'the party should be obtained and placed in the me,,47A Despatch or orders to Counselor Advocate:- In cases where a valid 'Vakalatnama' is filed and a Counselor an Advocate appears on behalf of the party, the Counselor the Advocate becomes the authorised representativeof the party for that case. So long as the (Vakalatnama' remains unrevoked by the party, the proper course would

be that all correspondence in that particular case should be conducted with the authorised Counsel and copy of theorder meant for the party should also be sent through him.

47B Sending of copies of adjudication orders etc. to the Company Law Board:- Every important adjudication

order/order in appeal involving the company where the adjudication and the penalty t fme and duty (taken together)amounts to Rll. one lakh or more should be sent to the Company Law Board at their address Company Law Board.Ministry of Law, Justice and Company Affairs. Shashtri Bhavan, Dr. Rajendra Prasad Road, New Delhi-l 10001.

(Circular No.13n9. F.No.207I9n8-CX.6)

48. Demand for Duty on Losses Occurring in Warebouses:- Rule 140 of Central Excise Rules, is a procedural ruleconferring upon the Collectors of Central Excise the power to appoint or to license warehouse. This rule by itself doesnot authorise collectIons of duty on deficiencies. It is. on the other hand, rule 160 that is appropriate in the matter ofdemanding duty on any deficiency of excisable goods found in the warehouse either during storage or resulting fromvarinus processes allowed under rule 143; dUl} in the departmental adjudication, should therefore be demanded underrule 160.

•9. Rate of duty in case of c1andestin~ removal:- Fordeterminationoftariffvaluationortherateofdutyunder rule 9A in cases of unauthorised, illegal or clandestine removal of goods, if the date of removal of goods isknown then it wou!d be determined under clause (ii) of sub-rule (1) of rule 9A. Where, however, the date of removalis not known then duty liability will be determined in terms of sub-rule(5) of rule 9A.

49A Release of confiscated goods beyond the time limit prescribed in the order-in-originaJ/order in appeal

clarification regarding:- For release of confiscated goods 011 payment of fme in lieu of confiscation beyond the timelimit specified in the order-in-original/order-in-appeal the instructions contained in Gold Circular No.3/83 dated3.6.1983 would mutatis mutandis apply to Central Excise cases also, except as regards to perishable goods.

Accordingly, in cases where the party (ies) has/have gone in appeal, the time limit specified for redeemingthe ~in the order-in-original will have no relevance, as the same is under challenge before the higher authority.Where the party has not gone in appeal, as the statutory limit for filing the appeal is three months, the party is eligibleto get the goods redeemed within 'the appeal per(od. irrespective of the time limit specified in the order-in-original.In any case wherever any time/limit is fixed by the adjudication officer or appellate authority for payment offine it is desirable to use the expression (or any extended time limit as may be fixed by me (i.e. the adjudicatingor appellate authority).

The ,above instructions are based on the advice of the Ministry of Law after the judgement of Kerala HighCourt in a.p. No.7198/81 (Surya Kumar Sheti Vs. Union ofIndia and others case) was brought td their notice.

50. Issue of Demand Notice under Rule 160 of the Central Excise Rules, 1944:- To 'demand' is to ask for

a thing asof right or pre-emptorily or urgently. The words •• as of right" are significant and should be noted ••To' Adjudicate' is to dccide upon the claim etc. This imports the requirement of giving the person concerned anopportunity to show causc. Therefore, an initial demand of duty that the officer might feel is due under rule 160may be raised couplc(twith a show-cause notice to the party after which (he officer should make the fmal demandin thc light of the cause shown by the party.

_Jl~36

51. Whether non-observance by the Trade or Licensee of Suplementary Instrm;Hm!~ !~::f~iHider Rule

233 of Central Excise Rules is Punishable;- The COiit:-al Board of Excise and Customs and the Collectors of Central

Excise ~ve ~!! aumcrised by Ruie 233 of Central Excise Rules to issue written inslructions providing for any

supplemental matters arising out of the Central Excise Rules, 1944.Failure to conform to the instructions issued underthis Rule is not a breach of any substantive rule of Central Excise Rules. Non-observance of the instructions issued

under this rule cannot, therefore, be penalised under Section 33 of the Central Excises and Salt Act, 1944.

52. Publication of the Orders and Notifications Issued under Rule 233 of the Central Excise Rules in the

Gazette ofIndia.- All notifications and supplemental Instructions issued under Rule 233 or any other Rule of Central

Excise Rules should be published in the Government of India Gazette and not State Gazette.

52A •• Publication or names or offenders in the Gazette.- The names of offenders are required to be published

under Section 3. Pan II of the Gazette ofIndia. In this regard reference is invited to the Ministry of Home Affair's

Off1ce Memorandum No.4I21/57-Public-I dated the 13th January, t9SB (Appendix-X).

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53. Date from which Notifications and Orders issued under Central Excise Rules etc. take effect.- In order

to avoid unnecessary disputes and adjudications resulting from bringing into effect on a wrong date of various

Notif1Cations, Rules. Acts passed by Parliament or ordinances issued by the President it is necessary for the officers

to know the date from which these Rules, Notifications etc. should take effect

(i) Acts passed by the Parliament and Ordinances issued by the President.- Unless otherwise provided for

in such statutes. all acts passed by Parliament and Ordinances issued by the President come inlo effect on the dale 01\

which they receive the assent of the President. '

(ii) Rules made under the Acts. such as the Central Excise Rules. amendments to Rules. Notifications in theGazette oflndiaissued by the Govt. under the Act or Rules.- Unless the operative date is specified in the Notificationsof Rules, all such Rules and Notifications issued under this item become effective only from the date on which

they are published in the Gazeue ofIndiaand not from the date on which they were signed by the appropriate authorities.

(Hi) Notifielltion Rnd supplemental Instructions such as under Rule 233 or under any other Rule ofCcntraJExcise Rules. issued by the Central Board of Excise and Customs and Collectors.- The same a!: under item (ii) above.

These' principles are applicable to the Notification etc. issued on the Customs side as well.

54. Liability or Carrier of Excisable goods to render assistance to Central Excise Officer und~r Rule 227or the 'Central Excise Rules, 1944.- Officers of Central Excise who are authorised to stop and search vehicles forexcisable goods in transit or at any check-post cannot compel the drivers of the conveyances to weigh the consignmentsunder Rule 227 of Central Excise Rules, 1944. The strict legal position is that Rule 227 refers only to licenseesand goods lying in the licensed premises and could, therefore, be invoked only when the owner or an agent of thelicensee refused to co-operate in weighing goods lying in the licenced premises. The truck driver is only authorisedto carry the goods and deliver them at the,destination and cannot be treated as agent in respect of the goods forallor any other purposes of the Central Excise Rules. The power to stop a vehicle is deri ved [rom rule 200 of the CentralExcise Rules. Under role 202, the Central Excise Officer may require any person who has the immediate possession,control or use of any conveyance etc., to open or allow access to inspcct or examine lhcexci~lble goods forlhe purposeof examination and check. If any person fails to comply with this requirement he can be proceeded against underrule 202(2). It is also provided under rule 202(2) that the cost incurred in this behalf shall be recoverable from theperson concerned as an arrear of land revenue. The proper rule which can be invoked against the driver, therefore,is rule 202. Notwithstanding this legal position the Central Excise Officers sh()Uld exercise discretion and notindiscriminately insist on unloading all packages carried in all vehicles and to weigh them. In cases of suspicion, theyshould use their discretion, and take the vehicles to the nearest convenient point for purposes of weighment. In cases

the checks have to be made in highways, the officers should equip themselves with weighing scales. They shouldalso, as far as possible, arrange for labour. All that the Department should expect of the truck driver is to givefacilities to check the consignment or to take it to (he nearest point where facilities exist for weighment

55. Competent a1.lthority for Adjudication of an offence committed in one Collectorate but Seizure ofGoods made. in another Collectorate.- (i) If excisable goods are dispatched from one Collectorate to another and

it is discovered at the place of destination that the goods were dispatched by the consignor in contra~ention of certain

1)

I)

bl~tl~)I,

37

JI'O\'i$ioos of the Cei1tralExcise RuIes,l944 which.~. such goods liable to seizure, it is the offlCCC,inwhosejurisdictiOn the offmce)Vas committed (place of removal in this'context) who is'competent to adjudicate the cases.

'The chief ai~n to detennine jurisdiction in Cmttal Excise.cases is thus the place where the offence is committed.

(ii) In respect of Customs cases however, the principle to,'be applied in respect of seizure and adjudicationis not the same as stated in the preceding sub-Paragraph. Section 110 of the Customs Act gives power to the properofficer to seize any goods if he has reason to believe that such goods are liable to confiscation under the Act Thereis no reference in this Section to the place at which such seizure can be effected. As such the seizure can be effectedat any place and.the case adjudicated by the competent officer under whose jurisdiction the goods were seized.

5S.A Offences of Iicensees.- When a licensee has been convicted by a court or penalised by an officer ofCentral Excise for serious offence, action should be taken simultaneously for cancellation, re'!ocatiGii of

suspenSionof the licence under Rule 181.Technj~J!}' aH=~~ 00suspended or revoked by the licensing authoritybu~~ ~ffi=~iiturdiJ18!C to the Collector should actually exercise the power in respect of any licence without the

prior approval of the Collector.

55.B ~rorcement 01orders ot adjudication.-(a) When an offence, or any,Central Excise matter involviitg duty, is adjudicated, the order passed may take oneor more of the following three fornis:

(i) A personal penalty may be imposed.(ii) Excisable goods may be confiscated, and a fine in lieu of confiscation may be imposed.(ill) Excise duty and additional excise duty may be ordered to be paid.

(b) Enforcement of payment of personal penalties:(i) Where a personal penalty has been imposed the

order passed by the adjudicating authority should not specify the period within which thepenalty should be paid.

(ii) Steps to effect recovery of 2 personal penalty.,by any of the means provided in section 11 ofthe Central Excises and Salt Act. 1944, should not be taken in any case, until the period for preferringan appeal has expired.

(ill) A distinction should be made between personal penalties imposed on (a) "owners of goods"in respect of which the offence' was committed (whether such goods are under detention or not)and (b) others.•

(iv) In the case of (a) if the owner has preferred an appeal, and the appellate authority has fixeda time w.ithinwhich the penalty should be deposited before the appeal can be considered, paymentof the penalty should be enforced by application of section II, after the expiry of such period.

(v) In all other cases, wherean appeal has been preferred, steps to enforce payment by applicationof section II should not be taken, before ord~ on the appeal have been passed. ,

(vi) There is no legal objection at any time, and in any case, to the detention of goods under Sec.142(1)(b) of the Custoli\sAct, 1962. as made applicable by notification issued under Section 12ol tbeCcntral ExcisesaadS~t Act. 1944until thepenalty ispaid. It should be noted in this connection_:- . \

(1) section 142(1)(b) of1be Customs Act. 1962permits not only the detention of goods inJeSpedCllwlMclt tbepcaaJty bas been imposed, but also of other goods belonging to the personp.llllii-A which are under exCise co~trol; -

(2) This section permits not only detention but also disposal of goods by sale;

(3) The detention of goods may take the form of stopping all clearances of the owner's goods!rom licensed· or·approved premises, i.e., a factory, a warehouse, bonded store room etc.

•••••••I'.•I.Q~

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(ill) In order that. in any appeal or revision application which the owner may have filed andwhich has not already been' decided prior to the disposal of the goods, an order may not be made bythe appellate or revisional authority in terms setting aside the order of confiscation, adjudicatingofficer must promptly inform the appellate authority that the goods have been sold already, so thatan appropriate order can be made by such authority, having regard to the facts of the case. Such order,for instance, may require that nct sale proceeds of the goods may be paid to the owner.

(d) Enforcement of Payment of Excise Duty

(ii) Excisable goods whether duty paid or not. belonging to the person who has been orderedto pay the duty may be detained under Rule 230 of the Central Excise Rules, 1944. The principlescontained in sub-paragraph (b)(vi) above are a!l applicable to such cases of detention.\

(1) The order of confiscation is liable to be set aside or annulled on appeal or revision, in which

event, that order would be deemed in eye of i.he :~Ww havG i1v~re!been made, and the goods towhich it should be held likewise never to have vested in Government

(c) Fines in lieu of confiscation- Date of disposal of confiscated ~oods-

38

i:) (iii) Where the goods in respect of which the duty has been ordered to be paid are under excise

I::: control, they should be detained pending paymep.t. It would not ordinarily'be necessary to detaindp

iii; other goods.

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••••_-,_ ..•. ~.~ .-" .••••.,tI'~••••••••..•. ~.,.

(i) The principles contained in sub-paragraphs (b)(i) to (v) above should also be tollowed inregulating recovery of excise duty ordered to be paid.

(i) Wherever confiscation is ordered under the Central Excises and Salt Act, 1944, or theRules made thereunder the adjudicating officer is required, under Sec.34 of the Act, to give the ownerof the goods an option to pay in lieu of confiscation such fme as the officer thinks fit. The period within

\ which this option can be exercised by the owner of the goods has not been laid down in the Actor the Rules. Under Rule 211, confiscated goods vest in the Central Government, and thf.'ICis no legal

bar to their being disposed of, at any time, after the order of confiscation is passed, but the order

of confiscation and the consequent vesting of the property in Government are subject to two

qualifications. namely-

(ii) If the owner fails to redeem the goods within the time-limit so fixed. the adjudicating officer

should proceed to dispose of the goods according to the provisions of paragraph 8-B after giving

a fresh notice to the owner of the goods, specifying the date fixed for sale. If the owner requests an

extension of time, it may be granted on the explicit understanding that Government accepts no

iesponsibility for any risks to which the goods may be exposed, and that the owner will, be requiredto pay such storage and other charges as may be incurred in respect of the goods.

(2) Themandatory provision of giving the owner of the confiscated goods an option to pay a

fine in lieu of confiscation shall be real, and not merely formal that is to say, the option should truly

enable the owner of the goods to redeem them on payment of fine specified.

Having regard to these quali.fications, it is necessary to give th.e owner of the goods sufficient and

reasonable time to redeem the goods on payment of the fine in lieu of confiscation. This time-limit

should ordinarily be three months, and should be specified in the order of adjudication itself. But inthe case of perishable goods, oror goods which are likely to depreciate quickly in value under nonnal

storage conditions, the ,time-limit should be fixed in each case on its merits, and should also bespecified in the adjudication order.

39

56. Provisional Release of Seized Vehicles - Pending Adjudication on Deposit of Security. Executionof Bond. In cases where Vehicles are seized by Customs Officers for carrying contraband goods fOr action underSa:uon 115 of the Customs Act, such vehicles may be provisionally released to the owner pending adjudicationon payment of security deposit and on execution of the bond in the fonn in Appendix V. *AssistantCoUect0r8

in Central Excise Collectorates are empowered to allow provisional release of the conveyance seized for violation of

ll1eCustoms regulations). The bond amount in every case should be the estimated value of the vehicles. The ~uritydeposit to be made in terms of the bond will depend on the gravity of the oftence committed in relation to the vehicle

liable to confiscation underSection 115 of the Customs Act.The object of such deposit is mainly to recover thepenalty,

if any, that may be imposed on the driver/owner etc., under S~tion 117 of the Customs Act Such deposit should

in any ca.~ebe limited to Rs.l 000 which is the maximum penalty under the CustQms Act The possibility of the driveror the cleaner being charged with being concerned in the unauthorised importation and thus punishable under Section117 of the Customs Act, generally speaking, is remote. Where however, a prima facie case is made out for suchpunishment a security deposit exceeding of the limits prescribed above may be taken depending upon the gravityof the offence.

'.CUSTOMS

CHAPfER VI

,-

"I Before provisional release of the vehicle it should however, be ensured that the same will-not be required asevidence at a later date. If it is likely to be so required the vehicle should not be released even provisionally.

*(F.Nc.22132/67-LCII dt.15.4.68)

57. Cases against Diplomatic and Consular Officers of Foreign Countries in India, how to be dealt with.­Although none of the foreign representatives in India is immune from the prohibition and restrictions imposed underthe various laws of the country it is necessary from foreign relations poim of view that proper care and caution shouldbe exercised in dealing with any offences under the Customs Act committed by such'persons. All officers of Customsor Central Excise competent to adjudge offences should not adjudicate on their own authority any cases againstsuch foreign representatives in theordinary way but should refer them toand obtain orders from theMinistry ofF"mance(Deptt. of R~venue before making any final adjudication. '

An such cases, therefore, should be referred to the Central Board of Excise & Customs, by the Collectors 01CustomS/Central Excise.

58. Deleted:.

59. Scale or Imposition of Fines and Penalties in cases of contravention of Import Trade ControL-Allofficers competent to impose penalties, fmes etc. under the Customs Act should carefully bear in mind that thefines and penalties imposed in case of contravention of Import Trade Control regulations/restrictions shouldnot be less than the scale prescribed in the instructions issued by t..'1eChief Controller of Imports & Exports fromtime to time. These instructions should strictly be adhered to while adjudicating such cases. -

60. Permission for reshipment within specified period of confIScated goods~·Instances have been broughtto the notice of the Board where adjudicating or appellate authorities permit reshipment of goods within a specifiedperiod. There are invariably cases where for one reason or the other reshipment is not effected during the periodspecified in the order-in-original or order-in-appeal. In the absence of any provision for extension of the time limitfor reshipment in the order itself, Custom Houses have taken a view that reshipment beyond the period specifiedin the order can be pennitted only by the next higher authorlty. This creates avoidable harassment for the passengersif reshipment could not be effected in time on account of unavoidable difficulties.

Board, therefore, "desires that adjudicating as well as appellate authorities while pennitting reshipmentuf any goods should clearly state in the order that reshipment would be penniued within specified period or suchextended period as may be permitted by the concerned Assistant Colla:tor.

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40

~II,)

(c) Transit passengers who are on a short visit to India m~ be allowed to take out tn. 'cHers ;/:)

(b) Where a traveller is a resident of India and has in his possession credit inslrument issued in (I)favourofthird parties by authorised dealers inIndiaor by banks outside thecountry, the instrumentsshould be detained and a special report with appropriateparticularsSlaling,interaliathepassport Ci)nllmber of the traveller, his full name and address should be forwarded to the EnforcementOircctornte for such action as the Enforcement Directorate may deem fit Action under the ~/)C\~"toms !'.Cl Illay be taken in consultation with the Enforcement Directorate.

(i) Cases of export of jewellery or precious stones in which the value 0f the artjcles is in exCess ofthe permissible limits and not covered by Reserve Dank of India permit in Form '1' may be reported tothe EnforcementDirectorate as soon asthey are detected for instituting appropriate enquirieS.Thig, however,

is without prejudice to the action to be taken by the custom House under the Customs Act for violationof relevant provisions of the Foreign Exchange Regulations Act.

(Board's letter F.No.495/19187-Cus.VI dated 9.4.87).

These instructions should invariably be kept inview while deciding caRes involving reshipment of the goods.

(iv) In regard to export of foreign currency cheques, travellers cheques, drafts and other credit instrumentsby passengers the position is as under:-

'I~(,,')1

(ii) In all cases ofunauthorisedexport of Indian and foreign currency notes, the notes may be confiscatedstraightway under the Customs Act and ,'redited to the Govl. lCconnl. .

(a) The passengers maybe allowed to take with them foreign currency, cheques, travellers' cheques,drafts and other credit instruments which ~reobtained from authorised dealers in foreign exchangein India, even though the details of the credit instruments are' not endorsed on their passportsprovided the instruments are actually issued in the name of the passenger concerned and in caseof traveller's cheques and letters of credit, the signature appearing thereon is verified with thaton the passport. Foreign exchange to travellers is issued by the banks in the fonn of travellers'cheques or letters of credit and it is only in exceptional circumstances that drafts are issued intheir favour. In case where bonafides are suspected a detailed report giving the name of the bankissuing the travellers cheques etC;the date of purchase (where available) the name of the purchaser,his passport number and the amount involved may be sent to the Enforcement Directorate forfurther enquiries.

(Hi) In respect of cases of export of foreign currency,cheques, travellers cheques, draft and other creditinstIumcnts by post where the amount involved does not exceed Rs.l,OOO penal action may betaken under the Regulations unless Collectors have reason to believe that the sender is not a fictitious

person and that he has exponcd, in the past, foreign exchange in small amount underlssumed nameswith a view to avoiding seizure, in which ca~ the matter should be rcp()rt~d to Enforcement Directorate.

Action against seized credit instruments as provided for in Section ·t2 of FERA 1973 must be taken

promptly. While taking action under Customs Act against credit instruments, a demiled r~port be sent toDirectorate in cases of seizures of value of more than Rs.50,OOO/-,

61. Adjudication oftas~ orGold smuggling in the form of crude jewcUery:- The competent adjudicatingauthority before. passing orders in respect of gold imported in the form of crude jewellery, should personallyinspect Ute ~cl~ and satisfy himself that they are not in fact crude jewellery.

62. Procedure in respect of seizure ofjewellery or prcdOlu; siones, currency notes, hundis and other

securities etc. attempted to be exported •• The following procedure should be adopted in regard to the treatmentto be accorded to cases of attempted exports of jeweUeryor precious stones, currency notes, foreign exchange,

hundis. shares and securities in contravention of the provisions of sections 13 a1d 19 of the Foreign Exchange

Regulations Act, 1973.

1~.~r;I!!I,I_!I!'~l!!!!'Ill,=i!-_!il]i,~~",''!iI,~~;!I'IAd\l!'l!!!!:Ji!~'~-:;;"!!i!""_Iii··"·::::"""__ "",•••~: •.•~._="".~":'"''''''~'~~':'"''''''''-~"r - ----.- .."1.

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41

cheques, drafts etc. obtained by them from banks in India or abroad provided they are made outin their names or endorsed in their favour or where these conditions are not fulf1l1ed, the Collector

of Central Excise/Customs are reasonably satisfied about the bonafides of the 'transit passengers'

In cases where credit instruments are acquired by such passengers in India, they will either be

in the form of traveUm cheques or travellers letters of credit and in both these cases, it will

be possible for Collectors to verify the identity of the holder.

(d) Specimen copy of the order passed by the Director, DR! confiscating some credit instruments

which were attempted to be smuggled out of India, copy of letter written to State Bank for

encashment of these credit instruments and copy of order releasing the amount so deposited in

the Bank to the pany are appended at Appendix XII for guidance of the officers ..

(v) In regard to export by post by passengers of rupee cheques drawn on banks in India and of rupee drafts

issued bypanks in India drawn on their branches or other banks in India action may betaken under the Customs_Act.--'Therefore;m all rases of unauthorised export of rupee cheques/drafts, Collectors of Central Excise!

. Cusk>ms may confiSC3te them straigh~ay under the Customs Act,1962.,

(vi) In regard to 'hundis' the position is that.it may be difficult to i.ake suiU\ble action andrealise the amountscovered by such documents although appropriate enquiries may be-made~with_ the 'persons in India for_contravention of Section 8 and 9 read with Section 47 of the Foreign Exchange Regulatlons-ACt, 1973.Wbetethe amounts involved are below Rs.IOC1J/;., the hundis may be confiscated under the Customs Act, 1962 and .~ ..­in case Collectors are unable to realise the value thereof, they may be fined. If, however, the persons,.concerning are suspected to be freq uent dealers in such transactions, the case papers may be turned overto the Enforcement Directorate.

(vii) (a) With regard to the disposal of the seized securities the main difficulty is that registrationwith the companies concerned would be necessary in order to give effect to any confiscation orderpassed bv the Collector in respect of such documents.

(b) It may be difficult to take any fruitful action against the securities offoreign companies butthe fact of confiscation itself would, no doubt, put the shareholder to difficulty and inconvenienceas he would have to comply with the detailed and time consuming procedure before he couldobtain duplicntes thereof. In slIch CU!lCS it may be useful if the company concerned may be servedwith the notice, that the original security has been seized and that, pending satisfactoryexplanation, from the shareholder its release is held tip by Collector. On receipt of such a noticethe foreign company may refuse to issue a duplicate but such a refusal will be entirely at theirdiscreti<'n. In such cases the security concerned may 00 released against payment of appropriatefme.

,

(c) Where the securities concerned are of Indian companies, similar action can be taken andin this case Indian companies will most likely co-operate with Collectors in exacting the penaltybefore the document is allowed to be disposed of in tenns of the current exchange ControlRegulations.

(d) As regard Bearer Bonds and Government Promissory Notes, it is open to the Collectors toconfIScate them and refrain from giving the party an option to redeem them on payment of fine.By reason of confIScation the securities etc. effectively pass into the ownership and possessionof the Central Government, who may notify the Government concerned that by reason of theconfiscation under the Customs Act the securities have come to be vested in them and that theyshould be regarded as the holders.

(e) National Savings Certificates are securities and as such their export without the Bank's

permission is prohibited. In a number of cases the National Savings Cenificates are taken out ofIndia by the holders for purposes of safe custody. As the certificates are not transferable byendorsement to third parties the.offence of exporting them without the Banks permit is technicaland a reference should be made to the nearest office of the Enforcement Directorate in such

cases. In all such cases a special report may be sent to the Enforcement Directorate on detection

.• ~----~-_ ..• ~-.-. ~,., __ ••v•.

42

of the offence for further enquiries and action under the Customs Act should not be takenuntil Collector receives communication from the Enforcement Directorate.

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39-A, Green Park, Jalandhar.

No.10-3-772, Vijayanagar Colony, HyderabadS.'.

Shastri Bhavan, Ilird Floor, IHrd Block, Haddows Road, Madras-600006.

Piyali Phoken Road, Reha Bari, Gauhati-8.

9/1, Madras Bank Road, BangaJore.

8, Lindsay Street, 2nd Floor, (Zonal Office) Cakutta-16.

151, Raj Bagh, Srinagar.

Building 'B' Stadium, Opp. Municipal Swimming Pool, NaVf'"cillgpura,Ahmedabad.

Wara Bhavan, Mavoor Road, CalicuL

6th Floor, Lok Nayak Bhawan, Khan Markel, New Delhi· 110 003.

Shanta Building No.ll-C, 2nd Floor Ste. Inez. Panaji, Goa.

33/123, Adarsh Nagar, Pratappura, Agra.

SB - 109, Lalkothi, Tonk Road, Bapunagar, Jaipur - 302015.

225-C, A.J.Ch.Bose Road, Calcutta-(Special Unit) 2.

Mittal Chambers, IInd· Floor, (Zonal Office-I) Nariman Point, Bombay.

Janambhoomi Chambers, 1st Floor, (Zonal Office-II) W.H.Marg, Bombay-I.

36, Gandhi Nagar, Sigra, Varanasi.

(g) Units or sub-units of the Unit Trust are also secwities for the purpQse of Foreign Exchange

Regulation Act. These are also transferable. These should be dealt with in the Ilame manneras Bearer Bonds and Government Promissory Note.

(f) Scrip or scrip certificates are not 'securities' within the meaning of section 2(u) of the Foreign

Exchange Regulation Act, 1973. .

(viii)Under the present arrangements the Enforcement Directorate has been authorised by Govt to dealwith cases under the Foreign Exchange Regulations Act, 1973. In all cases of infringements where the suinsinvolved are inexcess of amounts detailed above under appropriate headings, where the offenders are reportedto be traffickers in unauthorised dealings and where it is considered that further enquiries are necessary tobring the offenders to book, Collector may immediately arrange to send a special report:o the nearest officeof the Enforcement Directorate. Copies of adjudication orders on ill!cases ~f infringements detectedunder the Foreign Exchange Regulations Act should 00 forw~ed to (he nearest office of theEnforcement Directorate. It is necdle~s to say, wl'~never lidjudications are made the usual process forcompliance witk the principles of naturai justice, should be followed. The Headquarters of Enforcement

l---Dire<:t.orateare at New Delhi. The Directorate has established,branch offices at Bombay, Calcuttaand Madras and a number of other offices, the addresses of which are given below:-

1. New Delhi

2.

Jaipur

3.

Ag'.a

4.

Bombay

5.

Bombay

6.

Goa

7.

Ahmedabad

8.

Calcutta

9.

Calcutta

10.

Varanasi

11.

Gauhati

12.

Jalandhar

13.

Srinagar.

14.

Madras

15.

Bangalore

16.

Calicut

17.

Hyderabad

18. Madurai

19. Trivandrum

43

42, Basant Road, Centtal Excise Wing, Madurai.

TC-221820 (Opp. Head P.O.) C.V.Raman, Pillae Road, Trivandrum.

63. Realisation of value and Penal Action in Cases oi Export of Hundis and Cheques in Contraventionof Foreign Exchange Regulations Act. - When a cheque or hundi is confJSC8ted under Section 111 or 113 of the

Customs Act, 1962 read with section 11 of the said Act and Section 13 of the Foreign Exchange RegulationsAct, 1973 the cheque or the hundi would thereupon vest in the Government by virtue of Section 126 of the Customs

Act, 1962. When the Government acquires title to such cheque or hundi by operation of1aw, and not by endorsementand delivery as required by Section 50 of the Negotiable Instruments Act, the Government is not in the position ofholder in due course thereof and would "notbe entitled to the rights of a holder in due course thereof as defmed in the

said Act Though the Government in sucha situation, could not be said to bea transferee within the meaning of Section1300fthe Transfer of Property Act,18g2, t!:eposition would be comparable to that of such a transferee Broadly speakingthe Government in such a '3ituation like any other transferee by operation of mw, would be entitled to enforce theclaim by suing the drawer of the pronote or in the case of a hundi, the drawer or the drawee thereof. Apart from this,if the amount of the pronote or hundi has become due, the Government can as well recover the amount by way of set­off from the funds in its possession belonging to the drawer or the drawee as the case may be.

64. Imposition of penalties etc. in cases involving unautborised export or Indian Currency. -The instructionsregarding export of Indian Currency contained in paragraph 3 of the Ministry of Finance (Revenue Division) letterF.No.ll(I)-Cus.lW49, dated the 13th February 1950 (reproduced in Appendix VI) are applicable to exporttoPakistanonly. In respect of countries other than Pakistan also the restrictions on the export of Indian currency in excess ofpermissible limits laid down in Reserve Bank of India Notification No.F.E.R.A. I05/51-RB, dated the 27thFebruary, 1951 (as amended from time to time) may be strictly enforced and the amount of fmes in lieu of confISCationwherever they are imposed should be equal to the values of the amount of the currency involved, so as to make ituneconomic for the offender to redeem the notes.

65. Import trade control regulations - unauthorised Imports - imposition of rme in Ueu of COlUIScatioD

- In regard to infringement of Impon Trade Control regulations orders are issued from time to time by the ImportTrade Control authorities and the Central Board of Excise & Customs which should be strictly observed. Anylloubls arising thcrefrom should be referred to the Cenlral Board of Excise & Customs through the Collectors.

66. Unlawful import of Non-Dutiable and Non-Restricted but unclaimed goods. - The following procedureshould be followed for the disposal of non-dutiable and non-restricted goods which are not claimed by ownez, importedwithout a proper permit. Under the law, the only penal action pennissible is the imposition of a personal penaltyon either the owner or any person concerned in the passing of such goods unauthorisedly, but the goods themselvesare not liable to confiscation. They should, therefore, be considered as abandoned goods and dealt with underthe provisions of Customs Act, 1962. The following detailed procedure may be followed.

(a) Perishable goods - A public notice should issue either by hand Bill or by a notice put up on the NoticeBoard of the Land Customs Station nearest to which goods were seized or both, indicating the nature of thegoods seized, the fact that they have not been claimed, and the intention of the Custo~ Officer to auctionthe same under the provisions of the Customs Act The date of auction should be not over three days fromthe date of receipt of the goods in Land Customs Station. Every effort should be made to dispose of the goodsbefore deterioration sets in. The sale proceeds realised should be adjusted fll'Stly towards the payment ofany customs charges like rent etc. Secondly towards the cost of the auction itself and the balance if any, shouldbe kept in assessment accounts of revenue deposit for a period of one year. Any person who can satisfy theCustoms Collector that he is the owner of the goods sold can claim payment of the balance amount if hemakes an application within one year. If the application is made beyond that period, sufficient causeshould be shown to the satisfaction of the Assistant Collector of Land Customs concerned, for not makingit within such period.

(b) Other goods - The general procedure as detailed under (a) will apply. However, tho goods cannot be

sold within four months from the date of seizure of the same. A notice reg.armng sale should be published

!!!P!ll r II fII_ JIll AU

44

(ii) When any person claims the balance of sale proceeds of an auction referred to above, tbe possibilityof action under the Customs Act should be considered. The person will either have to be the owner of the

one concerned with offence of passing the goods, without a permit or through an unauthorised route. A :;how­cause notice can be served on him immediately and the procedure of adjudication gone through before thebalance amount is rel~..sed to him. A penalty, if any imposed can then be adjusted at the time of payment

of the haiance of sale proceeds.

in the official gazette and the adjusunentof sale proceeds will be as above. In effecting the sale of restricted

goods, arms and ammunitions etc., provisions of special or local laws should be borne in mind.

The form of guarantee referred to herein should be seen from Appendix VIl.& VIII.

(iv) Wbere the goods are notavailable for confiscation having been disposed oCin violation of the guarantee,deterrent penalties should be imposed for the offence of unauthorised importation and also for the breachof the condition of the guarantee.

(ll) An order ofconfisctionshould be passed with orwithoutfine in lieu of confiscation. Where the importeddrugs brought for ready use are of sub-standard quality, no option should, however be gi ven for their clearancefor home consumption, but the importer can be permitted to re-export the goods within the period specified.The loCal Assistant Drugs Controller should of course be consulted in accordance with the current practiceof the Custom Houses.

67·A Prohibition and restrictions under NDPS Act, 1985 and Rules made thereunde, regarding Narcotic .,.....Drugs and Psychotropic substances:-Possession. import into India. export from India and transhipment of .Narcotic Drugs and Psychotropic Substances is completely prohibited under Section 8 of the Narcotic Drugs and . ,

Psychotropic Substances Act, 1985 and Rules made thereunder except as provided for in the said Act J.

~

(i) Where, after test, it is found necessary to confiscate the drugs absolutely because they are sub-standardand as such not fit to be allowed for home consumption etc., the drugs should be seized from the importer'spremises and brought to the Custom House. Where, however. it is not proposed to confiscate the goodsabsolutely the drugs need not be brought to the Custom House but sealed and left at the importers premises.If, it is decided. by the adjudicating authority to give an option for re-shipment. the goods, in such anevent also, need not be brought to the Custom House but should be only sealed. On compliance with the termsof the adjudication order, the drugs should be released to the importer. If, however, the terms of theadjudication order are not complied with e.g. if the fme in lieu of confiscation, if any, is not paid. the drugsshould then be brought to the Customs House.

(ill) In addition, personal penalty may be imposed if the offence is deliberate and the circumstances of thecase warrant that action.

67. Procedure for adjuciation oforrences under Drugs Act and Rules. - When drugs contravening sections

9 & 10 of the Drugs Act become liable for action under Section 11 1(d) of Customs Act, 1962 the imposition ofa

personal penalty should not take the place of confiscating the goods in the ordinary course. In terms of the guaranteeprovided for under rule 40 of the Drugs Rules, 1955, the consignment is released to the importers before it is ascertained

whether the drugs are ofa standard quality or not or have been mislabelled etc. By virtue of the g!l~...ntce,Uieimporter

binds himself not to dispose of the consignment without obtaining L'ie written permission of the proper officer. As such,

at the time of adjuciation, the goods shouid be avlrllable for confiscation even though they may be in possession

01 the importer. It is of course, quite open to the adjudicating authority to impose a personal penalty in addition

to the confiscation of the goods but where confiscation of goods is possible the personal penally should nOl take

its place. Theremay ,of course be cases where even though the importer bas given guarantee undertaking not to dispose

of the goods, such goods are sold or allowed or passed into consumption in contravention of the guarantee. It is,

therefore, necessary to ensure before adjudicating the case that the goods arc actually available for confiscation.

for in the absence of the goods, an order of confiscation under Sec. III (d) of Customs Act, 1962, which relics merely

on the guarantee might be infructuous. In cases, therefore, whereactiQn under section tll(d) of the Customs Act.1962 is contemplated, it would be advisable to seize the goods before hand and thus ensure that they are availablebefore proceeding to adjducate. The following procedures for the guidance of th-eCustom Honses ia accordinglyprescribed:-

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All prohibitions and restrictions imposed by or under NDPS Act, 1985 on the import into India, export

from India and transhipment of Narcotic Drugs and PsychotrOpic Substances shall be deemed to be prohibited and

restrictions imposed by or under the Customs Act, 1962 and the provisions of the Customs Act shall apply accordinglyas per Section 79 of NDPS Act, 1985 ..

No Narcotic Drug or Psychotropic Substance specified in the NDPS Act 1985 and rules made therein shall

be exported out of Indialimported into lndiawithout export authorization/import certificate issued by the NarcoticsCommissioner and in a manner specified in the said rules.

68-69. Deleted.

70. Citing of proper authority in the adjudication order where Goods are absolutely Connseated.- Whereabsolute confiscation of the goods is ordered the relevant Act authorising such absolute confiscation must be citedin the adjudication orders e.g. section 3(2) of the Impons & Export (Control) Act. Unless the orders of adjudicationare precise and correctly worded, they are open to challenge. All officers competent to adjudge offences thereforeshould carefully note that the provisions of Law under which confiscation etc. is ordered must be clearly andunambigous)y stated in such orders.

71. Whether same goods can be eonrlScated twice for misdeclaration of value and contravention of.Import Trade Control Regulations - In order to make the position quite clear it would be better to illustrate it byquoting a specific case; the case is:-

A consignment of Toymonicas valued at Rs.l357 was. imported from the United States of America without

a valid import licence. As the goods originated from a dollar area and were a 'nil' item for licensing purposes, theywere confiscated absolutely by a Collector of Customs. The imponers appealed to the Central Board of Excise &Customs against Collectors Order but it.was rejected. Against the Board's order, the importers preferred a revisionpetition to theGovernmentofIndia who, however, directed that the offending goods be released for home consumptionon payment of a fine of Rs.630 in lieu of confiscation. When the case was taken up for action by the Customs inaccordance with the Govenunenl of India orders quotcd above it was discovered thatthe goods had also been under­valued. This point had not been considered at the time of presentation of the Bill of Entry when the question ofImport Trade Control Offences only was considered. The same goods were again confiscated by the Collectorof Customs, for the offence attracting clause 37 of Section 167, Sea Customs Act, and an option was given to clearthem for home consumption on payment of an additional fine of Rs.1500. Against this new order (original) of theCollector the importer preferred an appeal to the Central Board of Excise & Customs who in the peculiarcircumstances of the case held the view that the Government ofIndia having an exercise of its revisional powersunder the Sea Customs Act, 1878, directed the release of the goods on payment of a specified sum as fine, the Collectorwas in law bound and to carry out this order and to release the goods accordingly.

Once the goods are released and are taken away, the Collector would cease to have jurisdiction to passan order confiscating the same. The goods had not yet been released, and that the owner had not yet paid the amountof fine although he seemed to have offered to do so. The legal effect of the orders, including the order of the Govtof India, is that until they are so released the goods stand confiscated to the Govt. and. by section 184, they vestin the Government, subject only to Literight of the owner to redeem them on payment of fine. In the eye of the law,the goods belong to the Government of India unless and until the fine is paid and the goods are released. It follows,therefore, that since at the time the Collector made the order of confiscation the goods already stood confiscated to theGovt. and were the property of the Government and thus the Collector's (second) order confiscating the same goodsagain for under-valuation is inoperative and null and void. This is the legal position in a case where the goods hadbeen confiscated by the Collector of Customs and the fine in lieu of confiscation had not been paid by the importers.In case of this nature Collector has no authority to make the second order of confiscation before fine has been paidand while the goods already stood confiscated.

A question, however, arises whether the position would change if the fine in lieu of confiscation had beenpaid and ownership had reverted to the·impOrte~ and whether in that case the Collector of Customs could lawfullyagain proceed against the same goods in respect of another offence. The correct legal position in this changed contextand circumstances is that there is nothing in Customs Act to bar an action for an offence on the ground that it hadnot been taken earlier when action was taken in res~ct of another offence concerning the same goods. If therefore

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(ii) It is now well settled, that except for commodities which attract the provisions of Section 178 A S.C.A.or Sec.123 of the Customs Act, the burden to prove that the goods seized are smuggled is on the customsauthorities and save in a very exceptional dassof case, this burden never shifts. Even tlle provisionsofSec.l06of the Evidence Act do not help in shifting the onus. However, in a case where the person from whose

possession the goods are recovered, admit,> that he imponed these goods, he may, by aid of the principlesunderlying Sec. 106 of the Evidence Act, be called upon to show that h~ had a licence for such importation.Bht when the goods are recovered from a person who is not proved to be the importer of the goods and claimsto be a purchaser of the imported articles, onus is always on the customs authorities to establish that the

goods were imported contrary to any import prohibition or reslIiction, anu ~hey have to bring home the guiltto the person alleged.to have committed a particular offence by adducing satisfactory evidence.

"However. the point is that throughout the order the Asstt Collector assumed that the burden of proof wason the petitioner No.1 to prove that the goods in his possession were not smuggled into Indta or not imported illegally.According to him the petitioner No.1 was unable to prove that the goods that were seized were not smuggledgoods and had not been illegally imported. In my opinion the entire approach is contrary to law and theordercannotbe supported. The burden of proof in this case did not lie on the petitioner No.1 or either of the petitioners, butthe burden of proof was on the customs authority to prove beyond reasonable doubt that the goods had been illegallyimported and were smuggled goods. The mere fact that the goodS were of foreign make was nol sufficient to dischargethis onus or shift the same upon the petitioner. If the respondents had discharged the initial onus of showing thatthe goods had been illegally imported, then they could confiscate the same. For purpose: of penalty they would haveto go further and show that the petitioner No.1 had been in possession of the said goods with the knowledge that

they were smuggled. That, of course, has never been proved, because the lntitial onus had not been (tiscbarged bythe respondents ..

any goods are seized once and confiscated or any goods in customs custody are confiscated, and the fine imposed in

lieu of confiscation is set aside in appeal or revision it would still be lawful thereafter to seize the same goods, under

section 178 in connection with a distinct offence, for which action had not been previously taken, after the ownership

has reverted to the person concerned. The principle contained in this paragraph may be aplied mutatis mutandis toCentral Excise cases.

73. Imposition or enhancement of personal penalty in rfadjudication cases under Sec ••122 of Customs

Act, 1962.- There may be a situation where the appellate authority had quashed an order of adjudication in which a

fine in lieu of confiscation was imposed with or without personal penalty with directions for making a de-novoAdjudication. The question arises whether at the time of fresh adjudication it would be legally correct for the

adjudicating authority to impose a fresh personal penalty where no penalty was iuitially imposed or to impose a penalty

higher than one that may have been imposed in the quashed order. The correct legal position is that Section IIIof the Customs Act,1962 provides for dealing with offences enlisted therein. Neither this section nor any of the

provisions in the said Act provides any guiding principles as to when any of the penalties prescribed therein could

be imposed. In the circumstances the officp.r making the adjudication has full discretion to inflict the penalty or

penalties provided therein, which in his view may be just and adequate to meet the situation existing in a particular

case. The fact that the adjudicating officer did not impose any personal penalty on the previous occasion, i.e., in theI

initial (quashed) adjudication, would not debar him from doing SO once the said proceeding is quashed by the appellate

authority and he proceeds ahead to make a fresh adjudication. This, however, does not mean that personal penalty

could be levied against a person who may not be concerned with any of the offences described therein and this essential

condition should be satisfied before the punishment of personal penalty could be inflicted. The principle contained

in this paragraph may be followed in Central Excise cases as well .

73A. Onusofproofthat goods are smuggled or imported illegally on Customs Department.- (i) The Customs

authorities should exercise caution in deciding cases involving confiscation of goods, m~rely suspected to have

been smuggled and to which Sec. 123 of the Customs Act, 1962 does not apply. While considering the questior..of onus of proof in such cases, the High Court at Calcutta observed as follows;-

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(iii) There are three essential ingredients of the offence under Scc.167(8) of th~ S.C.f .•.or under Sec.l1l(d)of the Customs Act;

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(1) that the importation of certain goods has been prohibited or restricted;

(2) that the goods in question belonging to such category, have been imported!nto India i.e.,the goods are of foreign origin;

(3) that such importation has been contrary to such prohibition or resuiction.

Unless all the three ingredients are proved by the Department, lhe offence is not established. In other words even if

the impoctof a particular commodity has been prohibited for quite some timeanditis also proved that the seized goodsof that comrnodi ty are of foreign origin. it would not be sufficient evidence to hold lhat the goods seized are smuggled,unless there is evidence which conclusively leads to the inferencclhat lhe said goods were imported contrary toany prohibilion or restriction. It has been held that the circumstances that a person makes inconsistent statementsregarding lI'~ manner in which he came into possession of lhe articles, recovered from him, or that he did not maintain

proper accounl') to show the purchase of the articles, or that the purchase vouchers produced were found to be forgedcannot necessarily lead to the conclusion that the articles were smuggled or were imported contrary to anyprohibition or restriction The evidence to justify an inference of smuggling should be one which is relevant forproving the ur.authorised iml.'Ortation of the goods and not the unauthorised possession of the goods.

However. once there is evidence relevant for the consideration of the adjudicating authority and itreasonably leads to an inference that the goods were imported contrary to any import prohibition or resuiction, theCourts are not likely to interfere with the order of confiscation on the ground of insufficiency of the evidence.In fact in Ambala's ca<;e the Supreme Court upheld confiscation of certain items which based merely on a retractedadmission of the owner of the goods.

(iv) It is further well settled that (a) as soon a<; it is shown thatcetUin goods have been imported contraryto the statutory prohibition and restriction they are liable to confiscation and for confiscation it is not. ­necessary to establish further that the person from whose possession the said goods have been seized iscon:;emed with th~ illegal importation, as it is necessary for awarding the penalty and (b) the question ofbonafides of the person from whose possession the goods have been taken is immaterial, once it is shownthat the goods by whomsoever the importation may have been made, were imported in contravention ofthe statutory prohibition or restriction.

(v) If the goods are resnullius i.e. are unclaimed and they are not seized from anybody 's custody or possession,it would be open to the Dcpartmentlo contiscate them as soon as it is found that they are goods of foreignmanufacture and the importation of such goods is prohibited or restricted.

(vi) In view of the foregoing, the investigations should be primarily directed to procuring evidence whichwould be relevant for holding the goods as smuggled, though we should not discard our enquiries regardingthe manner in which the goods were acquired by the person from whose possession they were recovered. Itmust also be pointed out that Ute purpose of these instructions is not to slacken anti-smuggling measuresor to discourage town seizures but to make our investigations more purposeful, so that they lead toadjudications which are based on sound legal footings.

(F.No.4jI16/62-Cus.VI and 41149/65-Cus.III).

·73B. Enhancement of adjudication powers of Deputy Collectors etc.- The Board has recently had an occasion10 review the powers of adjudications of Deputy CoIlcl;tors and assistant Collectors. In regard to the powers ofadjudications of Asstt. Collectors it had been decided that they should be permitted to exercise the full statutory powersof adjudicating cases involving goods valued upto Rs.25,OOO/- including the power for imposition of penalty indeserving cases upto five times of the value of the goods in terms of the Section 112 of the Customs Act, 1962 ..

2. It has also been decided that tl1e powers of Deputy Collectors should continue to adjudicate cases wherethe value of goods is less than RS.llakh and the normal fine is less than Rs.llakh. However, taking into accounti.hefact that in several cases involving misdeclarations, under-valuation and olher offences ofa deliberate nature,need would arise for imposition of penalties exceeding Rs.l lakh by Deputy Collector, it has been decided that the

Deputy Collectors may)mpose personal penalties upto Rs.2Iakhs.

~--_.•._------~.-

• I

48

3. A large number of cases where penalties have to be imposed on carriers under Section 116 of the Customs

Act for not accounting for the goods were required to be adjudicated by the Collectors. In such cases, the 'penalty'

is really in the nature of dutyI and there is little scope for arbitrariness. The Board therefore, has also decided thatthe Deputy Collectors in charge Manifest Clearance Departments of the Custom House, Bombay, Calcutta and

Madras may be permitted to exercise full statutory power only in respect of adjudication of cases under Section 116of the Customs Act, where good~ loaded in conveyances arc not satisfactorily accounted for by the carriers.

4. In view of the foregoing, Board's earlier orders shall stand modified to the extent indicated above.

(CBE&C F.No.450/93n7 Cus.IV dated 4.2.80).

73C. Enhllncementof Adjudication powers of Deputy Collectors or Customs • In the Finance Bill 1984, whichreceived assent of President on 11th May, 1984 and enacted as Finance Act, 1984 (21 of 1984) certain categories of

cases under the Customs Act, 1962, as spell out in the clause 40 of the Finance Bill, 1984 amending Section 129A

of the Customs Act. 1962 have been taken away from the jurisdiction of the Customs, Excise &Gold Control Appellate

Tribunal (CEGA'I). Consequent upon the exclusion of the jurisdiction of the Appellate Tribunal, a provision

has been made for revision by the Central Government of Orders-in-Appeal passed in such cases. With a view to

ensuring that, in all cases pertaining to the excluded categories, the first appeal lies to the Collector (Appeals) and

the second to the Revisionary Authority i.e. the Joint Secretary to the Govl. of India, Ministry of Finance (DeptL

of Revenue), New DeUli, it has become necessary to invest the Deputy Collectors with full statutory powers of

adjudication in relation to the excluded categories of cases viz.

(a) Any goods imported or exported as baggage;

(b) Any goods loaded in a conveyance for importation into India, but which are not unload~ at theirplace of destination in India, or so much of the quantity of such goods as has not been unloaded at such

destination are short of the quantity required to be unloaded at their destination.

(c) Payment of Drawback as provided in Chapter X and the rules made thereunder.,2. Under Section 122 of the Customs Act, 1962, Deputy Collectors arc empowered to adjudicate cases

without any value limit, although by issue of executive instructions their adjudication powers have been restrictedto monetary ceilings .

3. In the context of the new provisions as contained in the Finance Act,1984, it has, therefore, been decidedby the Government that, in partial modification of Board's earlier instructions on the subject, the Deputy Collectorsmay exercise full statutory powers vested in them under section 122 of the Customs Act, 1962, in adjudicatingcases pertaining to the excluded categories only. Powers of adjudication of the Deputy Collectors in respect ofcases other than the aforementioned excluded categories of cases, however, would remain unchanged.

It should be ensured that the cases falling in the excluded categories which have been taken away from thejurisdiction of the Tribunal are adjudicated at the level of the Deputy Collectors and that the preamble to theorders contain clear directions that fIrst appeal against that order will lie with the concerned Collectors (Appeals)and the second appeal will lie with the Revisionary Authority, i.e., the Joint Secretary to the Government of India,Ministry of Finance (Department of Revenue), New Delhi. Additional Collcctcr is also, basically a Deputy Collectorand while adjudicating baggage cases he shoulq adjudicate it as Deputy Collector.

(Bombay Custom House S/o No.6808).

730. Orders in appeal passed by the Collector (Appeals) under section 128A(3) of the Customs Act, 1962

and the corresponding provision or Central Excise Act, 1944 - Communication thereof - Section 128A(5) of theCustoms Act and the corresponding provision of Central Excise Act, 1944 require that the copies of the order passedby the Collector (Appeals) under Section 128(3) of the Customs act. 1962. and the corresponding provision of theCentral Excise act, 1944 shall be communicated to the Collector of Customs or the Collect(\r of Central Excise as the

case may be: Yet sometimes the copies are being marked to the subordinate authorities like A.C.(RefundjA.C.(Tribunal Corrd. Unit) etc. This causes delay in taking a decision under section 129 A(2) of Customs Act, 1962and corresponding provision of Central Excise Act, 1944, and results in delay in filing appeal to the Tribunal. Since ..

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it is statutory requirement, the Collector of Customs and Central Excise (Appeals) should ensure that in future authe copies of the orders are also endorsed directly to the executive Collectors concerned.

(Board's letter F.No.390/123185-A.U. dt. 30.12.85).

73E. Extension otsummary procedure rordisposal or adjudication - In para 5. 13of their 89th Report, the EstimatesCommitme have recommended that the summary procedure of adjudication presently adopted in Baggage cases

should be extended to even other cases where the parties agree to dispensing with the requirement of Show-CauseNotice. After careful consideration of the recommendation made by the Committee, it has been decided to extend

the summary procedure, where the parties so desire in writing, to other similar simple cases besides baggage cases,

if they do not involve determ\lIation of any question having a relation to the tariff classification and rate of duty

,or the value of goods for the purposes of assessment or frauds prosecution or preventive detention or complex points

of facts or law,'etc. It may, however, be emphasised that in every case of summary adjudication proceedings adopted,the waiver of Show-Cause Notice should be only on the basis of a written request received in this behalf from the

concerned party.

'(Board's letter F.No.394/l33,184-Cus. (AS) Pl.V. dated 6.9.85).

13F. Non-levy or penalty in lieu or duty on short-landed goods. - Goods which are eligible for conditional

exemption, When short landed, 'cannot be given the benefit of Nil orconcessional rate of duty whi1~ imposing penaltyund~ Section i16 of the Act. While adjudicating such cases, a cautious approach should be adopted to safeguardrevenue. the obvious intention behind the provision under section 116 is to recover the duty on goods that have notbeen landed or accounted for satisfactorily, and accordingly interest of revenue would require that conditional benefitsof cOncessional rates of duty are not extended when the goods are short landed or not satisfactorily accounted for.

'(Board's F.No.442116I8S-Cus.IV dated 18.11.85).

730. lID Port or dry (ruits - instructions contained in Board; s letter F .No.493/' 126186-Cus. VI dated 22.12.86 •• There is very high profitability in the imponcddry fruits possibly on account of under-invoicing resorted to by the

, importers in connivance with the exporters abroad, ~dpartly on account of the increased seasonal demand. Accordingto ~miin reports, the profitability is over 200%. This has resulted in importers importing large quantities of dryfniits andpfOducing a smaller value R.E.P. licenCe with a view to get the excess value adjudicated for ITC purposes.Sucb imports have al&obeen effected on additionai licences issued to diamond exporters. Possibility of import of

dry fruits on such licences and with heavy under-invoicing be kept in view while adjudicating the cases and imposingadeqUate redemption fine. Margin of profitavailab!e in such cases should be taken into consideration while imposing

,redemption fine. With a view to ensuring ~at me orders issued in adjudication are sustained in appeal, necessary

,markC!t enquiries be mad~ and rely upon the report of the market enquiry in the adjudication proceedings. In appropiate... ~~ltsbould even be possible for the adjudicating officer to order absolute confiscation, if the facts of the case so

,::..,;~:t. ..';".

73H~ ',Clearance of Personal and home computers under Baggage Rules.-Earlier Personal and home computers ,with a memory of not exceeding 64-K were allowed under Baggage Rules. Since the issue of these instructions inNovember, 1984, the Import Policy for computers has been considerably liberalised and computers up to a value of

,Rs.10 lakhs have been placed under OOL. Further, with the advancement of technology, personal computers withmemory ranging upto 164-K or 232-K are available in ~e international market at very reasonabJe ra~. The duty

'leviable on computers when imported as baggage is also more than the general rate of duty applicable to computerswhen imported all cargo. It has, therefore" been decided that there should be no objection to permit import of allpersonal and home computers under the Baggage Rules, 1978. Imports in baggage are only for bonafide purposes.In order to ensure that computers are not imported in baggage for sale, the Assistant Collectors may ensure thatpassengers importing computers in baggage have eitlier the requisite qualification or the background or experiencein use' of computers.

Instructions have earlier been issued under Ministry's letter of even number dated 28.5.83 permitting impOrt

of computers as baggage under Rule 4 of the Transfer of Residence Rules, 1978. In view of the instructions nowcontained above, personal and home computers can be imported under rule 2 of the Transfer of Residence Rules.

1978 also provided the persons tlansferrillg their residence satisfy the conditions stipulated in the said rule. In thecase of such Imports also,lt would be necessary for the Assistant Collector to satisfy that persons importing compuiers

----_.,~~----------------------

50

under the Transfer of Residence Rules have the requisite qualifications or the background or the experience. in the use

of computers.

(Board's letter F.No.497/14/83-Cus ..VI dL.18.11.86).

73L Option in lieu or Confiscation· Exercise of discretion •Recording of reasons. - The Government of Indi;a,

.Ministry of Finance, .(Deptt. of Revenue) observes that while ordering absolute confiscation/exercising theirdiscretion no reasons are being recorded by the Adjudicating Officers. Principles of Administrative Law require

that discretion should be exercised in ajudicious manner i.e. actions should be supported by reasons to enable the cOlllS .

to look into the validity of these reasons. In the absence of reasons the Deparunental order I if challenged in courts,

may not stand.

/ It is, therefore, impressed upon all the Adjudicating Authorities :bat even for exercise of discretion i.e.,

for not giving the cption to redeem the goods on payment of fine in lieu of confiscation and for ordering absolute

confiscation reasons therefore should be given in the order-in-original./

(Bombay C.H.S.O.6786 dated 8.8.83).

73J. Documents seized under the Provision or Section 110 or the Customs Act,1962· Providing copies thereof

to the respondents • Regarding.

Of late the Board has been receiving complaints from time to time from importcr:\/exportcrs. companies and

Business houses that when raids are (;onduclcd by the CustoJIIs<llId Celltlal Excisl~ 01ficas a lurge IIum ber OrOtX;umcnl'i

are seized and taken away and they are not pern;1itted to take copies or extracts therefrom, resulting in inconveniencein their day to day work. In view of specific provision of law (Section 110(4) of Customs act, 1962) it is incumbent

on the part of the seizing officer to provide an opportunity to the respondents to make copies of such seized documentsor take extracts therefrom in the presence of an officer of customs. Needless to say that a responsible officer should

supervise the inspection of seized documents when copies are being made or extracts taken so that no tampering!

destruction of the documents take place.

73K. Import of Fire Arms.· At present import of rlIe arms as baggage is also not allowed vide ITC Public NoticeNo.131 dated 13.11.86. Earlier when fire arms were allowed as baggage but not as gift Board had issued instructionsvide letter F.No.49519/84-Cus. VI dated 13.6.86 that flIe arms imported without CCP should not be allowed clearanceon redemption fine but should be confiscated absolutely. Now when the import of flfe arms is not allowed evenas baggage those imported as such should also be confiscated absolutely.

73L. Adjudication of Baggage Cases· As at present there is no upper limit for importation of goods by variouscategories of passengers it will suffice if the duty leviable is recovered and there will be no need for initiation ofadjudication proceedings on account of contravention of the provisions of Import Trade (Control) Order as longas the goods brought by the passenger constitute bonafide personal and household effects and are not for sale ortrade purposes. However, in cases where the goods imported appear, from their nature, number, value etc. to be' forsale or trade purposes or when an attempt is made to smuggle goods by concealment or misdeclaration or wheuany otherlaw is contravened, the usual penal proceedings for confiscation of goods and imposition of fines/penaltieswill have to be initiated apart from charging the duty that may be applicable.

(F.No.495/92n9-Cus.VI dated 11.7.80).

73M. Monitoring of adjudication cases· need for keeping a careful watch on completion of proceedings in'RE!\1' and in 'PERSONEM' in all adjudication cases - Regarding.

It has come to the notice of the Ministry that in a Collectorate in 1969 in a major case of seizure involvingcontraband goods valued over Rs.411akhs, no departmental action for imposition of penalty was taken against the 19persons involved so far. though 10 of them have been convicted by Court of Law. Details of the cases are as follows:-

On infonnation, a Customs party keeping surveillance in a vulnerable coast noticed unloading of some goodsfrom a vessel and a truck waiting nearby to transport the goods. Soon after completion of the unloading operations

':)

51

and before the loaded truck could leave the spot, the Customs party rushed in, opened fue and succeeded in detainingthe loaded truck with the driver and 3 other persons as well as the vessel with 6 crew members. Anotha 4 pcnonswere later traced out from the surrounding jungles. In all, 153 packages of wrist watches suitings, shirtings and othermiscellaneous goods valued over Rs.41lakhs were seized, including the vehicle and vessel.

After investigations, show-cause notices were issued to 19 persons involved in the case for confiscation ofthe goods in ApriV May, 1970. But while issuing the show-cause notice, penal provisions of Section 112for imposition

of penalty against the persons involved and for confiscation of the vehicle and vessel (thus engaged) under section

115 of the Customs Act were not invoked. Subsequently, the Collector passed adjudication order confISCating thecontraband in July, 1970. This was without prejudice to any action that may be taken against the vehicle and vesselunder Section 115 of the Customs Act.

Immediately after passing the adjudication order, prosecution complaint was filcdin the Jurisdictional Court

of .Law in July I 1970. The judgement in the case was passed in March, 1972 in which out of 19 accused, 2 persons

were discharged 1 person died during the trial, 1 accused could not be traced, 2 persons were convicted and the restwere acquiued. Against the acquittal of 13 persons an appeal was filed in High Court. The High Court passed itsjudgemem in September, 1977 in which 8 persons were convicted, one person was acquitted and one died after filingthe appeal and on 3 persons no notice could be served. Regarding one absconder (owner of the vessel) Collector hasordered to revive the prosecution proceedings.

Though the department's case against the persons involved was strong, no departmental action against themfor imposition of penalty under section 112 of the Customs Act was taken. Action for confiscation of the seized vehicleand vessel was also totally lost sight of during long 15 years. The successive officers in charge of the Collectorate alsohad not obviously checked up the records of this case, as well as various registers maintained in that COlleclOraterelating to adjudication of the case, disposal of goods etc. The fact that departmental proceedings against the seizedvehicle and vessel are pending seems to have escaped the attention of the officers who may have inspected Iheformations also.

The case cited in earlier paras underlines the need for proper scrutiny and follow-up action by superiorofficers at val ious levels, in resp(~ctor cases detected within the Collectorate. In order to avoid recurrence of such

cases of lhe type referred to above, the Ministry desires that wherein proceedings in 'rem' would have been completed,leaving aside the proceedings in 'personem' under the Customs Act, it would be necessary to pursue Ihe records ofsuch cases where the proceedings were split 10 ensure that whatever proceedings p-ending, are completed without fail.Ministry desires that such serious lapses as staled above should not recur.

Further, prosecution should normally be launched only after completion of the departmental adjudicationproceedings in 'rem' as well as in 'pcrsonem'. But processing of the case for prosecution should simultaneously,be taken so that final decision on prosecution is taken immediately on completion of the adjudication proceedings.

Past cases of similar nature may please be examined to take aClion wherever necessary.

(Govl. orIndia, MiniSlry of Finance (DeptL of Revenue), New Delhi's letterF.No.711/16/84-LC (AS) datedthe 14th September, 1984).

73N. Gent'nll - The Celllfal Appraising Manllal contains a Chapler on adjudication. This Chapter contains oldand new llIslrucLions/guidelines concerning adjudications. It is suggested that this Chapterin the Appraising Manualmay be referred to as and when more detailed inSlructions are needed .

•

52

APPENDIX 1<•.

(See Para 10)

Form of Show-Cause Memo

OFFICE OF THE OF CENTRAL EXCISE

Notice to Show Cause

No.

To

MrJMessrs,

Whereas it appears that Mr./Messrs has/have contravened Rules of the Central ExciseRules, 1944, inasmuch as he/they the said Mr./Messrs .is/are hereby required to show cause to the of CentralExcise why apenalty should notbe imposed on him/them under Rule of the CentralExcise Rules, 1944, and why the (goods) in respect of which the offence appears to have been committedshould not be confiscated under Rulc of the Ccntral Excise Rules. 1944.

2. Mr./Messrs is/are further directed to produce. at the time of showing cause. all theevidenceupon which he/they intends/intend to rely in support of his/their defence.

3, Mr.fMessrs should also indicate in the written explanation whether he/they wishes/

wish to be heard in person before the case is adjudicated.

4. If no cause is shown against the action proposed to be taken within ten days of the receipt of this notice he/theydoes/do not appear before the adjudicating officer when the case is posted for hearing, the case will be decided exparte.

*5. Mr./Messrs should also produce the quantity of .(Description of the goods)

which had, after seizure, been released on .in terms of Bond executed on .(Date of release) (Date of the Bond)

before the undersigned within one month of the receipt of this notice and if he/they fail to do so. he/they should showcause why the Bond should not be enforced and the security dcposit appropriated .

................ of Central ExcisePlace

Date

No dated 19 .

Copy forwarded to thc Assistant Collector/Superintcndent/Range Officcr of Ccntral Excise ................................ .for information with reference to his No datcd 19 .

..................... of Central Excise.

·Inserted by Bds F.No. 15/4nO-CX.6 dl. 21.4.1971. To be struck off. if not applicable

I).,j

I)l

53

APPENDIX I-A

(See Para lOj

COLL'ECTORATE OF CENTRAL EXCISE

,Show Cause Notice

C.No .

To

.........................................................................................

••••••••••••••••••••••••••• , •••••••••••••••••••••••••••••••••..•.• e •.••••••••••••••••••••• II

Dated the .

~----

It appears that the goods/currencieslbullion securities men~oned in theSchedule below have been imported!were about to be exported (by you) by land from Pakistan/India into IndiaIPakistanOn.•..•.•.•.•.•...••..•..................through........•................................ without.

(i) a valid import/export license as required under Notification No.•.....•....•....... dated ..•......•................ issued under Section 3(1) of the Imports & Exports (Control) Act, 1947.

(ll) a valid permission gr.mtedby theReserve BankofIndia under Notification No•...•.....dated •.......•.....• issued under Section 8/13(1) a of the Foreign Exchange Regulation Act, 1947.

(ill) a proper declaration as required by Notification No.....•.............. dated...•.........•... issued underSection 12(I) of the Foreign Exchange REgulation Act, 1947.

(iv) in contraventjon of Notification No......•..... dated ......•..........•.. ic:sued under Section II of the. Customs Act, 1962 in your import for the following reasons.

(State reasons)

The goods l11ereforeappear to be liable for confiscation under Section 111( )1113( )of the Customs Act, 1962 and you also appear liable for personal penalty under Section 112( )~~~ .

You are, themf~; L, called upon to show cause before the undersigned at•...•.....within one month from thedate hereof why the 84, ;.'t goods should not be confiscated and why penalty should not be imposed upon you underthe aforesaid pro\"ision;:;of law.

All evidence, documentary or otherwise, in your possession should be produced in support of yourexplanation within the period sp'>:jfied above falling which the case will be decided ex parte.

You should stJ' ..J[ the S'IHlClit:·c ",!letha YOll d0sire to be heard in person. On receipt of your reply, a timeand date will be fixed ;'.'I'l comlllunicated to you.

Superintendenf/Asstt Collector/Central Excise and Land Customs

Schedule

List of goods ' Value.

1·,·1. HJ<"'lj;ifl I ".'II,MlII_IJII,lll ""Qlll"._.,·,,,

S4

APPENDIX II

(SEE PARA 2A)

REGISTER OF PROSECUTIONS

Sl.No. Adjudication File No.Adjudication order No.Name of the Compannyl

and Dare

person(s) penalised in the

"tfinliil'i+;n" orderClUJ w-.... ... LAv •• ~- - - . ,.

1.

2. 3.4.

I:8

~

aI

••otI.

Name of the Company/person(s) against Date on prosecution has beenwhom prosectuion has has been sanctioned

5. 6.

Date on which prosecutionlaunched in the court

7.

Brief details

8.

Present position

9.

Remarks

10.

:)~

55

APPENDIXllI

(See P.ara 14)

Notice-Cum-Explanation

(To be used for offences where the value of goods involved is less than Rs.5(0).

To

-------

.'

Sir,

The of Central Excise,

III,I,,It•

Whereas it is alleged that I/We have contravened Rules ...•............. of tho Central Excise Rules 1944,inasmuch as I/W e* 8penalty is proposed to be imposed for contravention of Rules ..••....••••........ and

. the ~oods in respect of which the offence is alleged to have been committed are proposed to be confiscated under

rule of the Central Excise Rules, 1944, by the competent officer of Central Excise.-

2. My/Our explanation to the above charges is enclosed. I/We have no other evidence or expla.nalion togive in defence of the offence/offences alleged to hav~ _b~n committed by me/us ..

3. I/W e do not want .to be heard in person by the adjudicating authority. The case may, therefore. bedecided as early as possible without calling upon me/us to furnish any further explanation.

Yours faithfully,

Signature ....•....•..••......•..•

Address •.•...••.•••.•.•.••••..•••

(with licence No. if any)

*Enter here details of the offencc(s).

56

APPENDIX IV

(See Para 45)

OWICE OF THE _ _ OF CENTRA.L EXCISE

Notice

To

Shri/Sarvashri

Whereas it appears that Shri/Sarvashri has/have contravened Section.................................. of the Central Excises & Salt Act, 1944/R.ule of the Central

Excise Rules, 1944 inasmuch as that (here mention the details of tne offence) which is punishable under Section .................................. of the said ActjR.u1e of the said Rules.

2. 'lbe said Shri/Sarvashri is/are hereby asked whether he/they desires/desire to

compound the case mentioned herein under Rule 210-A of the Central Excise Rules, 19#on payment of a sum of amoney ofR! •......•........ ill lieu of the punishment provided in the Sections of the Act/Rules mentioned in paragraph1 above.

3. If Shri/Sarvashri is/are agreeable-of his/their own free will to

have the case compounded on payment of the sum mentioned above, he/they should intimate the same to the

undersigned within 10 days of the receipt of this notice failing which the offer of compounding contained herein shallstand cancelled and action will then be taken under the Central Excises and Salt Act/Central Excise Rules, 1944.

Place ~ .

Date .

................................................... of Central Excise

aa:IG

tit

(t•IoI.I

l!1~

.1D

~~

a~

•~)

~

oIt)

It3·a

1)

.~

57

APPENDIX V

(Supara56)

Form or Bond for Provisional Release or Vehicles Seized under the Customs Act

KNOW ALL MEN BY THESE PRESiNTS THAT VWE ••••••.•••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••of

..•..................•............... hereinafter called the "GRANTOR" [which shall unless excluded by or repugnant to thesubject and context include (in case of individual) his heirs, executors, administrators and/or representative (in caseof fIrm) their partners and theirreapective heirs, executors,administrators and/or representatives (incase of a limitedcompany) their successors and/or successors] am/are jointly and severally held and fmnly bound unto the Presidentof India [hereinafter called "the Government oflndia" which expression shall include his successors and/or assigns]in the sum of Rs (Rupees ) here insert the bond amount to be paid to the Governmentoflndia or to the Collector of Land Customs or as he may direct for which payment well andtruly to be made I/We the graIJtor do bind and oblige myself/ourselves for the whole fIrmly by these presents.

Whereas the Grantor is the sole owner/owners of the vehicles mentioned in the ~hedule ther:eto which havebeen seized by the Land Customs OffIcers and the case is under consideration and investigation of the Land CustomsCollectorate .

AND WHEREAS the said vehicles being the public vehicle/or vehicles used as public or private carrierI/we have applied to the Collectorate of Land Customs for the release of the said vehicle pendinginvestigation and have deposired with the Collectorate of land Customs a sam of Rs ..................•........(Rupees only) (hereafter the Security deposit amount) to be applied for the purpose hereinafter mentioned.

AND WHEREAS the Collector of Land Customs has agreed thereto subject to the terms and conditionsherein contained.

AND WIIEREAS the Grantor has agreed lo the lCrrns and comliliofls oflhese presents and has agreed to executethe same.

NOW THE CONDITIONS OF THE ABOVE WRITTEN BOND OR obligation are SUChthat:

(a) the offIcer adjudicating upon the case Is not of the opinion mat the vehicle should be or should havebeen confIscated or does not after adjudication pass an order for confiscation or for realisation of fine in lieu ofconfiscation or for payment of any incidental charges or in the event of his imposing any personal penalty eitherof the GRANTOR or any other person concerned in the case of fine and/or penalty and/or other incidental chargespayable by the Grantor ::hall have been paid; and

(b) the grantor produces the said vehicle whenever called upon to do so by the Collector of land Customsor any person duly authorised by the said Collector, of, and

(c) the Grantor ,1; ':.',: ;)mpli~s with the provisions of the Customs Act, 1962 and/or any rules and regulationsmade thereunder in :elation to the enquiry if any to be held by the Land Customs Officers or in relation to theadjudication in the case.

THEN the above written bond or obligalion shall be void,olherwise the same shall subject to the provisionsherein contained. remain in full force and ':irtuc.

PROVIDED AL-WAYS and it is hereby expressly agreed and declared by and between the parties tothese presents as follows:· .

(1) Nothing herein contained shall prejudice effect of the right of the Government of India or the

Collector of Land Customs to proceed ·against the Grantor in respect of breach of the provisions

.._~-"'~_._------------------

58

of any law for the time being in force or to recover any amount which may be found to be payableby the Grantor in excess of the amount deposited as hereinbefore stated.

(2) It is declared that these presents relate to theperformanceofanactin which the public are interested.

(3) The said deposit of Rs made by the Grantor as aforesaid may at any time be appropriated

by the Collector of Land Customs or any other officer who may be incharge of the case of the Grantor

towards any penalty that may be imposed by the adjudicating officer and/or agaiIist any fine in

lieu of confiscation and/or against all incidental charges that may be due and payable by the Grantor

in respect of the preservation, transport of the vehicle, and the balance if any shall be refundedto the Grantor.

(4) In case the above written bond or obligation becomes void as aforesaid the said sum ofRs ....••.;.....deposited by the Grantor shall be refunded to him/them.

The schedule above referred to -

1. Ma1c.e .

2. Model .

3. No. of cylinders .

4. Horse power .

5. Registration No .

6. Engine No .

7. Chasis No .

8. Seating capacity .

IN WITNESS whereof the parties to these presents have here-unto set and :;ubscribed their respectivehands this day of One thousand nine hundred .

.................................................................SIGNED by the Grantor at · ·.. · ·.. · ·(~~~·~fthe place)

.10 the presence of .

*Signature .

Occupation ...............................................•...................

Address .

SIGNED BY for and on behalf of the

President of India by at .

In the. presence of

•

IIIIIltt

S9

APPENDIX VI

(See Para 64)

Copy ofleUtZ No.ll(l)-Cus.llI/49, dated 13th February, 1950 from the Ministty of Finailce (RevenueDivision) New Delhi.

Please refer to this Ministry's telegram of even number, dated the 4th March, 1949.

2. In order to make the ban on imports of Government oflndia one rupees notes effective it has been decidedthat such notes found with a person should be confiscated under the Finance Ministry Notification No. 12(12)-PI/49,dated the 10th September, 1949, read with sections 19 and 167(8) of the sea Customs Act, and a redemption fineequal to the value of the notes should be imposed under section 183 so as to make it prohibitive for the importer toredeem :be notes. The notes should eventually be sent to the Manager, Reserve bank of India, Bombay for destructionwithout any fmancial adjustment

3. As regards the export of currency notes, (which term does not include one-rupee notes) each individualis allowed to take with him/her not,es upto Rs. 50 in value. This limit also applies to traders at the borders and it isopen to them to make use or the nonnal banking channels to transact their business. This ban should therefore bestrictly enforced and no leniency should be shown to offender. As absolute confiscation is not possible, fmes equalto the value of the notes involved in each case should be imposed on offenders. These notes should also be sent to

the Reserve Bank of India who will adiust their value by crediting the Customs Budget

4. The Government of India attach great importance to the strict adherence of these instructions, and if thereare any hard and deserving cases requiring special treatment they should be referred to the Government of India forspecial orders.

60

APPENDIX VII

(See Para 67)

FORM I

Letter of Undertaking

(Vide proviso to Rule 40 oltlle Drugs Rules,1945)

Bill of Entry No. :

Steamer:

Description:

Marks & No.:

Packing and quantity:

Country of origin:

Value:

Inconsideration of the Customs Coilector or any officer onhis behalf having pennitted onclear the abovegoods, notwithstanding his decision to detain the same goods under the above mentioned rule 40 of the Drugs Rules,1945 on having reason to doubt, wheiher the above mentioned goods comply with the provisions of Chapter IIIof the Drugs Act, 1940 and the rules thereunder, I/We hereby undertake:

(1) that I/we shall not dispose of the said goods without the consent of the Customs Collector or anyofficer on his behalf in writing;

(2) that I/we shall return the said goods in whole or in part as the Cus!OmsCoHecior or any officeron his behalf may direct within 10 days of the receipt of a notice from the Customs Collt.Ctororany officer on his behalf to return the goods:

(3) that l/we shall reship or surrender the said goods within two months of the receipt of an order tothat effect from the Customs Collector or any officer on his behalf; and

(4) that l/we shall forthwith pay such fine and/or penalty and be liable for such punishment as theCustoms Collector or any officer on his behalf or Magistrate may impose under Section 11 of theDrugs Act, 1940 as read with relevant provisions of the Sea Customs Act, 1878 and under Section13 of the Drugs Act, 1940.

The undertaking referred to above is given in view of rule 40 of the Drugs Rules,1945.

Witness: Signature .

'·~'M,." "·~;'I''''._Il .•HH

61

APPENDIXVllI

(See Para 67)

FORM II

Generalle~ of undenaking forrelease of Drugs and Medicines imported in contravention of the provisionsof the Drugs Act, 1940, and Rules thereunder.

Bill of Entry No.:

Steamer:

Description:

Marks and No. :

Packing and quantity:

Country of origill:

Value:

In consideration of the Customs Collector or any officer on his behalf permitting us to clear the above' goodsalthough the same have contravened the following provisions of the Drugs ·Act, 1940 and Rules, thereunder, namely:-

(1) .(2) ....•..........................(3) ._ .

l/we hereby underl.llke

(1) that I/we sh811

(I) ........•.............(2) ...........•..........(3) .

Within a month thereof or such extended period as the Customs Collector or any officer on his behalf may allow:

(2) that I/we shall not dispose of the said goods without the previous consent of the Customs Collector orany officer on his behalf in writing and

(3) that I/we shall pay such fine and/or penalty and beliable for such punishment as the Customs Collectoror any officer on his behalf or Magistrate may impose for the contravention of provisions of the Drugs Act,1940 and Rules thereunder either in the event of or notwithstanding my/our complying with conditions (1) and(2) above;

. The undertaking'referred to above is given iri view of rule 40 of the Drugs Rules, 1945.

Wi mess:

Signature

. --.. - -------..~.

62

APPENDIX IX

(See Para 5)

(Form of undertaking for safe custody of seized goods)

To

THE PRESIDENT OF INDIA

I/we of No do hereby state that I/we have this day of .

..•.•.•.•.•••••.....••.....received from the following number of packages containing (here state

the description of the goods) valued at Rs•..••••.•.and in consideration of the sum of Rs.•.••..••.....••...•.•paid by

•••••.•.•••••••.••.•...••••••••.••l/we hereby undertake to keep the said packages with me/us for safe custody.l/we furtherundertake to produce the said ~kages containing the said goods in tact and in the same condition as they are now(reasonable wear and tear expected), wherever called upon to do so by and not to deliver the same to any personor otherwise dispose of or deal with the same without an order in writing from .

(Signature of the Bailer) .

Witness:

63

APPENDIX X

(See Para 52A)

No.4/21/57-Public-IGOVERNMENT OF INDIA

MINISTRY OF HOME AFFAIRS

Dated New Delhi the 13th Jan., 1958

OFFICE MEMORANDUM

Subject Form of the Gazettes of India-Bifurcation of Pan II Section 3..

According to the present form of the Gazette of India as laid down in the Ministry of Rome Affair's OfficeMemomndum No.6/17/49-Public dated 31st March, 1950 all Statutory Rules and Orders issued by the Ministries ofthe Governmen tofIndia (other tha:1the Ministry of Defence ) and Central Authorities (othec than Chief Commissioners)are published in Part II, Section 3 of the Gazette of India By inclusion therein of statutory orders which do not make

substantive legal provisions this Section has at present become very cumbersome and it is difficult to locate statutoryrules and orders which make such provisions. To overcome this difficulty, it has been decided, in consultation

with the Ministry of Law, that this Section may be further divided into two separate sub-sections (i) and (ii),Subsection (i) may include statutory rules, orders, byelaws etc. of a general character which make substantivelegal provis~ons and will be numbered as G.S. Rs. (General Statutory Rules). All other statutory orders, notifications,etc. may be included in sub-section (iii), (ii) and numbered as "S.O". (Statutory Orders).

2. The following headings will accordingly be adopted for these sub-sections of Section 3, Part II.

Sub-Section (n General Statutory Rules (including orders, bye-laws etc. ofageneral character) issued by the Ministriesof the Government of India (Other than the Ministry of Defence) and by Central Authorities (other than theAdministrations of Union Territories).

Sub-Section (iD Statutory orders and notifications issued by the Ministries of the Government of India (otherthan the Ministry of Defence) and by Central Authorities (other than administrations of Union Territories).

3. The q!Jestion whether the Weekly Statements of Reserve Bank of India which are to be published by the CentralGovernment under Section 53 (i) of the Reserve Bank of India Act, 1934 should in future be published has also beenconsidered. It has been decided that these statements are published under the authority of the Government ofIndiain the Ministry of Finance. They should appropriately be included in sub-section (ii) of Section 3 of Pan II. The

same practice mar be adopted in respect of notifications relating to statutory bodies which are published underthe authority of a Ministry of Government of India

4. It has been further decided that all nOLifications and orders to be published by Statutory Bodies lilce lhe Instituteof Chanered Accountants excepting those notifications which are published under the authority of a Ministry oCtheGovernment of India which will come under sub-section (ii) of Section 3 of Part II as indicated in para 3 above, shouldbe published in Part IJJ Section. The heading of this Section may be as follows: .

"Miscellaneous Notifications including notifications orders, advertisements and notices issued by StatutoryBodies" ..

5. The existing Pan IV will continue to be devOLed Loadvertisements and notices by private individuals and

64

other private bodies. This will be made clear by adopting the following heading for this part:

"Advertisements/notices by private individuals and private bodies",

6. The above form will be adopted with effect from 1st February, 1958.

7. It is requested that at the time of sending any matter for publication in Section 3, Part II of the Gazette of India

after31st January, 1958, clear instructions may be given as to the sub-section in which the matters has to be published.

If any doubt arises as to whether a notification should be published in Sub-section (i) or Sub-section (ii) of Section

3 of Part II, the Ministry of Law may be consulted.

Sd/­

(Fateh Singh)Deputy Secretary to the Government of India.

65

APPENDIX XI

(See Para 2H)

STATEMENT - I

Statement showing time schedule for dealing with suit notices/writ petitions or special civil applications

S.No.

1

1.

2.

Matter

2

Suit Notices

Writ petitions

Action to be taken

3

(i) Forwarding the suit notice to Collec­torate headquarters by the officer on whomthe notice is served along with the detailedcomments on each paragraph and theconcerend records.

(ii) Forwarding copies of suit notice, re­ceived from lower level, by the Collectorto the Board, along with detailed com­ments on each paragraph of the notice.

(iii) Where the suit notice is served uponthe Collector forwarding copies of noticeto the Board along with parawise com­ments.

(iv) Where suit notice is served upon theBoard;Govt. and is forwarded to the Col­

lector by the Board/Ministry returning thenotice to the Ministry along with parawisecomments.

(i) Forwarding a preliminary repon W UII,;

Board/Ministry by the Collectorate Head­quarters, along with parawise commentsand copies of rulenise/petition.

(ii) Furnishing parawise comments to theSolicitor.

(iii) Drafting the affidavit by the Solicitorin consultation with the Collector and

sending the same to the Board/Ministry.

(iv) Return of draft affidavit by the Board!Government of India.

Time limit

4

IS days from the date of re­ceipt of notice.

IS days from the date of re­ceipt in Colleetorate Head­quarters office.

1 month from the date of re­

ceipt in Collector's office.

20 days frOm the date of re­ceipt from the Board/Minis­try.

10 days from the date of re­ceipt ..

20 days from the date of re­ceipt of Rule niSe/petition.

2 months from the date ofissue of the Rule nisc.

10 days from the date of re­ceipt.

Notc- A writ petition is posed for hearing within a date specified by the High Court. Every attempt should thereforebe made to complete forl1)alities within that period. The above dates are tentatively fixed for general guidance

Statement showing ,time schedule for submitting an appeal to High Court/Supreme Court etc.

66

8T ATEMENT II

-.­

••I••IIICD

•G~

•••o

30 days.

2 days from the date of receiptof judgement.

30 days.

4.

15 days from the date of re­ceipt of certified copy ofjudgement

15 days from the date of re­ceipt of certified copy ofjudgement

30 days from the date of re­ceipt of certified copy ofjudgement

3.

(iii) Forwarding certified copy of HighCourt's order granting leave to appealto Supreme Court

(i) Forwarding to Board copy of ad­verse appellate judgement along withCounsel's opinion as to filing of anappeal to Supreme Court

(if') Forwarding certified copy of HighCourt's order refusing leave toappeal tothe Supreme Court along withCounsel's opinion as to applying forspecial leave.

(v) Forwarding all connected recordswhere leave to appeal to SupremeCourt

(ii) Communicating to Board the High lOdays from the date of order.Court's order gr.mting of refusing icavcto-appeal to the Supreme Court

Forwarding to the Board copy of theadverse judementand copy of counsel'sopinion as to filling of an appeal.

TIME SCH~DULE FOR DISPOSAL OF PAPERS

2.

Appeal to Supreme Court

Appeal toHigh Court froma decree or order of thesame'court.

Appeals to High Court ,Forwarding to the Board copy of thefrom a decree or order of adversejudgmentand copy of counsel's

any other court opinion as to filling of an appeal.

1.

3.

1.

2.

I=~

10

it

67

APPENDIXXll

(A) Specimen copies of orders in respect of Credit Instruments [para 62 (iv)(d)]

F .N 0••••••••••••••••••••••••••••••••••••••••••••••Directorate or Revenue Intelligence

New Delbi.

Dated the

Dear Sir,

Subject:- Encashment of Bank.Draft and Traveller Cheques of Shri..............•••.......•....•••........

Enclosed please find herewith:-

(i)

(ii)

(Hi)

(iv)

)(

)(

)(

)(

(Details of draft. •• yellers cheques etc.)

2. The above mentioned Bank.Draft and Traveller Cheques are being forwarded to you along with the originalcopyofan OrderNo.----------------dated -------issued videF.No.--­------------ of !he Director, Directorate of Revenue Intelligence, New Delhi far theirencashment and for keeping their proceeds in a separate Savings Bank Account in your Bank. to be maintained byyou in the prescribed manner till fut!her orders from the Directorate, Directorate olRevenueIntelligence, New Delhi.

J. Younrc rcqucstcd to scnd liS an intimation as soon as the said instruments arc encashed.

Yours faithfully.

(DEPUTY DIRECTOR)

Copy forwarded for infonnation to:-

1. The Controller, R.B.!, Exchange.Department, Bombay.

2. The Joint Controller, Exchange Control, R.B.I. New Delhi.

3. The Director, Enforcement Directorate, Lok Nayak Bhavan, New Delhi.

DIRECTOR

(C)

(B)

Date , .

ORDER

)( (Details of Bank Draft, Travellers Cheques etc.)

)(

)(

)(

(iv)

(iii)

(ii)

(i)

Directorate of Revenue Intelligence,

Indraprastha Bhavan, LP.Estate, New Delhi.

68

Now. therefore. the undersigned in exercise of the powers conferred upon him as Collector of Customs videGovernment ofIndia, Ministry of Finance. DeptL of Revenue and InsW"aDce.Notification No. MF(DR) 37-Cus.dated the 1st February. 1963 as amended in conjunction with the powers conferred upon Collector of Customs underSection 42 of the Foreign Exchange Regulations Act, 1973. hereby order that the aforesaid Bank Draft and TravellersCheques be encashed by the State Bank of~ndia •................................................................................... the proceedsthereof be kept by them in a separate Savings Bank Account to be maintained by them in the prescribed manner tillfurther orders from the undersigned.

And whereas. investigation is being made by this Directorate against Shri .

for contravention of the provisions of Section 13 and Section 18 of Foreign Exchange Regulations Act, 1973 read withSection 67 of the Act ibid;

DIR. F.No .

Whereas. the following Bank Draft and Travellers Cheques in respect of foreign exchange as shown againsteach have been. prima facie,foundtohavebeenreceivedbyShri illegally and werebeingauempted

to be smuggled out of the country by him on . when he was leavin~ for__________ by .

Directorate of Revenue IntelligenceI.P.Bhawan, New Delhi.

DR! F.No . Dated the ..............................•......

Whereas. the following Bank Draft and Travellers Cheques in respect of foreign exchange as shown againsteach were found to have been received by Shri illegally and were being attempted to besmuggled out of the country by him on when he was leaving for .......................................•...

(i) )(

(ii) )( (Details of Bank Draft. Travellers Cheques etc.).

(iii)

(iv)

)(

)(

69

And. whereas, the above said draft and traveller cheques were encashed by State Bank: of In-

dia, •......................... and presently kept in a separate Savings Bank Ale. under orders No dated

And whereas, the Hon'ble CEGAT vide order No ordered release of the above said

bank <daft of (value) to Shri .

Now, the undersigned in exercise of the power conferred upon him as Collector of Customs vide Govt. ofIndia, Ministry of Finance (Deptt of Revenue). Notificaitn No. MF(DR) 37 -Cus. dated 1.2.1963 (as amended) underScction42 of the Foreign ExchangeRegulations act, 1973 hereby order that the aforesaid amount deposited in SavingsBank Ale. maintained by State Bank of India, be released to Shri

DIRECfOR GENERAL.

The Branch ManagerState Bank of India

Copy

•

to the Collector of Customs .for necessary action.

,J" 11hl.1I .• I" III

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