Government of India
Department of Revenue
Central Board of Excise & Customs
New Delhi
Circular No. 974/08/2013-CX
New Delhi, the 17th September 2013
To
All Chief Commissioners of Central Excise & Customs,
All Chief Commissioners of Central Excise,
All Directors General,
Sir/Madam,
Subject – Arrest and Bail under Central Excise Act, 1944 - reg.
1.1 I am directed to invite your attention to the amendments to sections 9A, 20
and 21 of the Central Excise Act, 1944 vide the Finance Act, 2013. A new
sub-section (1A) has been inserted in section 9A to specify that the offences
relating to excisable goods, where the duty involvement exceeds Rs. fifty lakh
and which are punishable under clause (b) or clause (bbbb) of sub-section (1) of
section 9, are cognizable and non-bailable. For ease of reference, clause (b)
and clause (bbbb) of sub-section 9(1) as well as new sub-section 9A (1A) are
summarized below:
- Clause (b) of sub-section 9(1) - Whoever evades the payment of any duty
payable under this Act;
- Clause (bbbb) of sub-section 9(1) – Whoever contravenes any of the
provisions of this Act or the rules made there under in relation to credit of
any duty allowed to be utilised towards payment of excise duty on final product.
- Sub-section 9A(1A) - The offences relating to excisable goods where the
duty leviable thereon under this Act exceeds fifty lakh rupees and punishable
under clause (b) or clause (bbbb) of sub-section (1) of section 9, shall be
cognizable and non-bailable.
1.2 All other offences under section 9 are non-cognizable and bailable.
2.1 Thus the offences under Central Excise Act fall in two categories - bailable
and non-bailable. Depending on the type of offence committed, a person is liable
to be arrested in either of the two category of offence. Since arrest takes away
the liberty of an individual, the power must be exercised with utmost care and
caution and only when the exigencies of the situation demand arrest.
Non-bailable offences
3.1 A person is liable to be arrested for non-bailable offence only when the
offence committed by him is covered under clause (b) or clause (bbbb) of
sub-section 9(1) and the duty involvement exceeds Rs. fifty lakh. Thus, it is
essential to examine offences in each and every case with reference to each of
the clauses of sub-section 9(1) and also the quantum of duty involved prior to
invoking the arrest provisions. Only where clause (b) or clause (bbbb) are the
most appropriate clauses to describe the offence and duty involved exceeds
rupees fifty lakhs, these provisions should be invoked. Any person arrested for
offences under these clauses should be informed of the grounds of arrest and
produced before a magistrate without unnecessary delay and within 24 hours of
arrest.
3.2 A list of non-bailable offences where decision to arrest may be taken by the
Commissioner is given below:-
- clandestine removal of manufactured goods;
- removal of goods without declaring the correct assessable value and
receiving a portion of sale price in cash which is in excess of invoice price
and not accounted for in the books of account;
- taking Cenvat Credit without the receiving the goods specified in the
invoice;
- taking Cenvat Credit on fake invoices;
- issuing Cenvatable invoices without delivering the goods specified in the
said invoice.
3.3 In all other cases of cognizable and non-bailable offences, covered by
clause (b) or clause (bbbb) of sub-section 9(1) where the duty involved exceeds
rupees fifty lakhs, which are not listed at paragraph 3.2 above, e.g. (i)
removal of inputs as such, without reflecting such removal in records, on which
Cenvat credit has been taken, without payment of amount equal to the credit
availed on such inputs (ii) irregular and wrongful availment of benefit of
central excise duty exemption by reason of fraud, collusion, willful
misstatement, suppression of facts, or contravention of the provisions of the
Act or the rules with intent to evade payment of duty, etc, decision to arrest
shall be taken by the Commissioner only with the approval of the jurisdictional
Chief Commissioner.
Bailable offence
4.1 A person is also liable to be arrested in case of non-cognizable and
bailable offences, when such an offence is committed. Amendments have been made
in section 20 and section 21 to provide, inter alia, that powers to grant bail
or release an arrested person on execution of bond can be exercised only for
offences which are non-cognizable. Any person arrested for non-cognizable
offence shall have to be released on bail, if he offers bail, and in case of
default of bail, he is to be forwarded to the custody of magistrate. In terms of
notification no 9/99-C.E.(N.T.) dated 10-2-99, an officer not below the rank of
Superintendent of Central Excise can exercise powers under section 21 including
powers to grant bail.
4.2 Bail should be subject to the condition(s), as deemed fit, depending upon
the facts and circumstances of each individual case. It has to be ensured that
the amount of bail bond/ surety should not be excessive and should be
commensurate with the financial status of the arrested person. Further the bail
conditions should be informed by the arresting officer in writing to the person
arrested and also informed on telephone to the nominated person of the person(s)
arrested. Arrested person should be allowed to talk to the nominated person. If
the conditions of the bail are fulfilled by the arrested person, he shall be
released by the officer concerned on bail. The arresting officer may, and shall
if such a person is indigent and unable to furnish surety, instead of taking
bail, discharge him on executing a bond without sureties to his appearance as
provided under section 436 of CrPC. However, in cases where the conditions for
granting bail are not fulfilled, the arrested person shall be produced before
the appropriate magistrate within 24 hours of arrest.
4.3 Only in the event of circumstances preventing the production of the person
arrested before a Magistrate without unnecessary delay, the arrested person may
be handed over to nearest Police Station for his safe custody during night,
under proper Challan and produced before the magistrate the next day. These
provision shall apply for non-bailable offence also. The nominated person of the
arrested person may also be informed accordingly.
Precautions to be taken by the departmental officers
5.1 Powers to arrest a person needs to be exercised with utmost caution. Chief
Commissioners/ Commissioners of Central Excise are required to ensure that
approval for arrest for non-bailable offence is granted only where the intent to
evade duty is evident and element of mens rea / guilty mind is palpable.
Attention is also invited to the decision of the Hon’ble Supreme Court in case
of D. K. Basu Vs State of West Bengal, wherein specific guidelines in respect of
arrest have been provided. These are required to be followed.
5.2 Decision to arrest needs to be taken on case-to-case basis considering
various factors, such as, nature & gravity of offence, quantum of duty evaded or
credit wrongfully availed, nature & quality of evidence, possibility of
evidences being tampered with or witnesses being influenced, cooperation with
the investigation, etc. To summarize, power to arrest has to be exercised after
careful consideration of the facts of the case and the above factors.
5.3 There is no prescribed format for arrest memo but an arrest memo must be in
compliance with the directions of Hon’ble Supreme Court in case of D. K. Basu Vs
State of W.B reported as 1997 (1) SCC 416. The arrest memo should include -
- brief facts of the case;
- details of the person arrested;
- gist of evidence against the person;
- relevant Section(s) of the Central Excise Act, 1944 attracted in the case;
- the grounds of arrest must be explained to the person arrested and this fact
noted in the arrest memo;
- a nominated person (as per details provided by the person arrested) of the
person arrested should be informed immediately and this fact also may be
mentioned in the arrest memo;
- the date and time of arrest may be mentioned in the arrest memo and the
arrest memo should be given to person arrested under proper acknowledgement;
- a separate arrest memo has to be made and provided to each person arrested.
5.4 Further there are certain modalities that should be complied with at the
time of arrest and pursuant to an arrest, which include the following:-
- Arrest of a female should be carried out by or in the presence of a lady
officer;
- Arrest memo should be attested by nominated person (such as member of
family) of the person arrested or a respectable member of the locality from
where the arrest is made;
- Medical examination of the arrested person should be conducted by a
medical officer in the service of Central or State Governments and in case such
medical officer in not available, by a registered medical practitioner soon
after the arrest is made. If an arrested person is a female then such an
examination shall be made only by, or under supervision of a female medical
officer, and in case such female medical officer is not available, by a female
registered medical practitioner;
- It shall be the duty of the officer having the custody of the arrested
person to take reasonable care of the health and safety of the person arrested.
Reports to be sent
6.0 Chief Commissioners shall send a report on every arrest to the Zonal Member
within 24 hours of the arrest giving such details as have been prescribed in the
monthly report. To maintain an all India record of arrests made in Central
Excise, a monthly report of all persons arrested in the Zone shall be sent by
the Chief Commissioner to the DGCEI, Headquarters, New Delhi in the format,
hereby prescribed and enclosed, by the 5th of the succeeding month.
7.0 All previous circulars on arrest and instructions in the Supplementary
manual of instructions stand modified to the above extent.
Yours Faithfully,
(Pankaj Jain)
Under Secretary to the Govt. of India
F. No. 4/2/2011-CX-1
Encl: as above
Monthly Report on Persons Arrested in a Zone
Sl No |
Name , Designation and Age of the person arrested
|
Date of arrest |
Commissionerate Concerned |
Name and registration no of the company
|
Amount of Duty Evaded |
Role in evasion and nature of evidence collected |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Total |
- |
- |
- |
- |
- |
- |