Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs
Circular No. 1018/6/2016-CX
New Delhi, dated the 29th February, 2016
To,
Principal Chief Commissioners/Chief Commissioners of Central Excise (All),
Principal Chief Commissioners/Chief Commissioners of Central Excise & Service
Tax
(All),
Principal Commissioner of Central Excise, Service Tax (All),
Web-master, CBEC
Sir/Madam,
Subject: - Withdrawal from prosecution in Central Excise cases older
than 15 years involving duty less than rupees five lakhs.- reg.
CAG submitted its report regarding administration of prosecution and penalty
in
Central Excise and Service Tax wherein regarding withdrawal of old cases of
prosecution, it noted that “though the discretion to allow withdrawal of
prosecution
ultimately rests with the Court, it is the department’s responsibility to ensure
periodic
monitoring of the status of long pending cases as to ensure that cases which in
the
opinion of the department merit withdrawal are being brought to the notice of
the Court
alongwith all supporting facts at the proper time in terms of Sections 257 and
321 of
CrPC 1973.”
- The issue has been examined. The present limit for arrest and
prosecution in
Central Excise cases is Rupees one which was made effective vide
Circular No.
1010/17/2015-CX dated 23.10.2015. Earlier, the limit for launching
prosecution was
Rs.25 Lakhs, which came into effect vide letter F.No. 208/31/97-CX6 dated
04.04.1994.
Taking into consideration this increase in the limit for prosecution over a
period of time,
expenditure involved in continuing with old prosecution and equivalent value
of the
present threshold limit of rupees one crore in the past, it was decided to
collect
information on prosecution pending in courts for more than fifteen years
where the duty
involved is less than rupees five lakhs. On the basis of the reports
received, it was found
that there are 288 cases older than fifteen years, involving duty of rupees
five lakh or less.
In these 288 cases, the total amount of duty evasion involved was found to
be Rs.2.31
crore, which comes to an average of Rs. 80,000/- per case.
- Provisions relating to withdrawal of prosecution are contained in Section
257 and
Section 321 of the CrPC. Further, in the case of Sheo Nandan Paswan Vs.
State of Bihar
and Others, (1983) 1 SCC 438, Hon’ble Supreme Court noted, while examining
the scope
of Section 321, four grounds for seeking withdrawal from prosecution. Out of
these four
grounds, two relevant grounds for Central Excise are as under:-
(i) Inexpediency of the prosecution for reasons of State and Public Policy,
and
(ii) Adverse effects that the continuance of the prosecution will bring to
the public
interest in the light of the changed situation.
- In the light of the legal provisions under section 257 and 321 of the
Code of
Criminal Procedure 1973, and the judgement of the Hon’ble Supreme Court, it
appeared
that Central Excise cases involving duty amount less than Rs. five lakhs and
undergoing
prosecution in the courts for more than fifteen years may be considered for
withdrawal
from prosecution. Accordingly, these cases where evasion of Central Excise
duty is less
than Rs. 5 lakh and pending in court for more than 15 years were brought to
the notice of
the Competent Authority suggesting that withdrawal from prosecution would be
desirable
in these cases on the following grounds:
4.1 Present limit for arrest and prosecution in Central Excise is Rupees one
crore. This
enhanced limit of one crore was prescribed on 23.10.2015. Before this date,
the limit
since 1994 was rupees twenty five lakhs. The present enhanced monetary limit
indicates a
liberal policy of the government in relation to prosecution. If this limit
is interpolated to a
value fifteen years back, it would be higher than Rupees five lakh.
Therefore, it would be
reasonable to conclude that the equivalent cases, of the cases under
consideration, would
not undergo prosecution today,
4.2 Withdrawal from prosecution would be in conformity with the policy of
the
Government to reduce litigation in taxation,
4.3 Expenditure involved in continuing with such prosecution may not be
commensurate with the result likely to be achieved,
4.4 The Human resources saved can be redeployed to garner more revenue for
the
exchequer.
4.5 Withdrawal of such cases would send a positive message to the
manufacturing
sector in which policy of “Make in India” is being actively pursued.
- After due consideration, it has been decided with the approval of the
competent
authority to recommend filling of application before the Hon’ble Court to
withdraw from
prosecution of the cases where evasion of Central Excise duty is less than
Rupees five
lakhs and prosecution is pending for more than fifteen years. Chief
Commissioner shall
give direction to the Central Excise Officer in the concerned
Commissionerate to request
the Public Prosecutor to file an application requesting the Court to allow
withdrawal from
prosecution in accordance with law. It may be noted that on filing of such
applications, it
is for Hon’ble Courts to finally decide whether or not to pursue the
prosecution.
- Attention is also invited to the
circular no. 1010/17/2015-CX dated
23.10.2015 on
withdrawal from prosecution where quasi-judicial proceedings on identical
facts have
failed. Appropriate action as per this Circular may be taken where
necessary.
- Application should also be moved for withdrawal from prosecution against
the conoticees
in a case, where the prosecution, against the main noticee is proposed to be
withdrawn, as the grounds for withdrawal of prosecution would apply equally
to the conoticees.
- On examination of specific cases, if there are more grounds available for
discontinuation of prosecution proceedings, the same may be incorporated in
the
application before writing to the Public Prosecutor to file the application.
On the other
hand, if there are valid grounds available for continuation of the
prosecutions
proceedings, the same should be examined by the Chief Commissioner and where
it is
proposed to continue with prosecution, it should be brought to the notice of
the Central
Excise wing in the Board with necessary justification.
- This shall come into force from 1st of March, 2016. Difficulty, if any,
in the
implementation of the circular should be brought to the notice of the Board.
Hindi
version will follow.
(antosh Kumar Mishra)
Under Secretary to the Government of India
F. No. 96/54/2014-CX.1
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