Circular No. 874/12/2008-CX Dated 30/6/2008
Instructions regarding Section 11 DDA of the Central Excise Act, 1944. -I
am directed to refer to the Section 11DDA of the Central Excise Act, 1944
(hereinafter referred to as “the Act”) inserted by the Taxation Laws
(Amendment) Act, 2006, with effect from 13.7.2006. This section provides for
provisional attachment of property for the purpose of protecting the interests
of revenue during the pendency of any proceedings under Section 11A or Section
11D of the Act.
2.In
this connection, the Law Ministry has advised that suitable guidelines should be
issued to implement Section 11DDA of the Act. The following guidelines are,
therefore, issued to maintain uniformity in its implementation by field
formations:
(i)
The proceedings for provisional attachment can be initiated only after
issue of Show Cause Notice (SCN) under Section 11A or 11D of the Act.
(ii)
During the pendency of the proceedings under
Section 11A or 11D of the Act, if the Central Excise Officer is of the opinion
that, in order to protect the interests of revenue, it is necessary to attach
the property of the noticee, he shall prepare a proposal in the format
prescribed in the Annexure hereto, and forward the same to the jurisdictional
Commissioner of Central Excise for his approval, except in cases where the
proceedings under Section 11A or 11D of the Act are pending before such
Commissioner of Central Excise, in which case he shall himself make the order of
attachment, in accordance with the procedure set out in sub-para (iv) below.
(iii)
It is important to note that there should be
sufficient justification to hold a view that the provisional attachment of
property is necessary to protect the interests of revenue.
The remedy of attachment being, by its very nature, extraordinary, has to
be resorted to with utmost circumspection and with maximum care and caution.
The grounds on which the Central Excise Officer entertains the reasonable
belief that the noticee would dispose of, or remove, the property and the source
of his information, if any, should be clearly stated while seeking the previous
approval of the Commissioner of Central Excise.
Normally, the proposal to be made to the Commissioner of Central Excise
should be forwarded within one month’s period of the issue of SCN. It may also
be noted that appropriate disciplinary action shall be initiated against the
officers who may be found to exercise the powers of provisional attachment of
property frivolously and without sound reasons. [Recommendation of the Standing
Committee on Finance (Fourteenth Lok Sabha) in its 27th Report.]
(iv)
The Commissioner of Central Excise, on receipt of proposal, or on his
own, if he is satisfied that circumstances of the case justify provisional
attachment, may serve a notice for provisional attachment on the person on whom
notice is served under Section 11A or 11D of the Act, requiring such person to
make submissions, in writing or in person or both, within fifteen days of
serving of the notice as to why should the property belonging to such person,
and as may be specified in the notice, be not provisionally attached. The said
notice should also specify the condition that the noticee should not sell,
transfer, mortgage, charge, lease or otherwise alienate or encumber the property
specified in the notice, till the decision of the said notice is communicated to
him by serving of an order. In case of proposal for provisional attachment of
immovable property, the notice should also be sent to the concerned registration
authorities with a direction not to allow any sale, transfer, mortgage etc., of
the property.
(v)
After due consideration of the materials before him, and after hearing
the person, if such person so desires, the Commissioner of Central Excise may
grant approval to the provisional attachment of the property and the Central
Excise Officer before whom the proceedings under Section 11A or 11D are pending,
may, by order in writing, attach the said property. The Commissioner shall grant
such approval, or where proceedings under Sections 11A or 11D of the Act are
pending before him, order the attachment of the property within 15 days of
holding the personal hearing. A
copy of the order of provisional attachment should be served by the Central
Excise Officer in the same manner as prescribed under Section 37 C of the
Central Excise Act, 1944.
(vi)
The following types of offences committed by a manufacturer or an
exporter may be considered for provisional attachment of property:-
(a)
Removal of goods without the cover of an
invoice and without payment of duty;
(b)
Removal of goods without declaring the
correct value for payment of duty, where a portion of sale price, in excess of
invoice price, is received by him or on his behalf but not accounted for in the
books of account;
(c)
Taking of CENVAT
Credit without the receipt of goods specified in the document based on which the
said credit has been taken;
(d)
Taking of CENVAT Credit on invoices or
other documents which a person has reason to believe as not genuine;
(e)
Issue
of excise duty invoice without delivery of goods specified in the said invoice;
(f)
Claiming
of refund or rebate in a fraudulent manner such as on invoice or other documents
which a person has reason to believe as not genuine.
(vii
The provisional attachment of property shall be resorted to only in a
case where the duty or CENVAT Credit alleged to be involved in the above
specified offences is more than Rs.25 lakhs (Rs. Twenty five lakhs).
(viii)
Period of Attachment :
(a)
The order of provisional attachment of
property shall be operational for a period of six months from the date on which
the order is served on the noticee. However, the Chief Commissioner of Central
Excise may, for reasons to be recorded in writing, extend the aforesaid period
by such further period or periods as he thinks fit, but the total period of
extension shall not, in any case, exceed two years.
(b)
The order of provisional attachment shall cease to have effect if
the noticee pays the entire duty amount along with interest.
(ix)
Types of property which can be
attached :
(a)
Personal property of a sole proprietor
or of partners of a firm shall not be attached.
Personal property means any movable or immovable property which is in the
personal use of the sole proprietor or partner. However, immovable property/
properties which is / are used for any commercial purpose may be provisionally
attached.
(b)
Movable property
should be attached only if the immovable property available for attachment is
not sufficient to protect the interests of revenue.
It
should also be ensured that such
attachment does not hamper normal manufacturing activities of the assessees.
This would mean that raw materials and
inputs required for production or finished goods should not be attached
by the Department.
(x)
Attachment not to be excessive:
Provisional attachment by arrest or distrain of the property shall not be
excessive, that is to say, the property provisionally attached shall be of value
as nearly as may be equivalent to that of the amount demanded in the proceedings
under Section 11A or Section 11D of the Act.
(xi)
Attachment between Sunrise and
Sunset: The provisional attachment of the property of the concerned person
by arrest or distrain shall be made after sunrise and before sunset and not
otherwise.
(xii)
Inventory: After provisional
attachment of the property, the Proper Officer shall prepare an inventory of the
property attached and specify in it the place where it is lodged or kept and
shall hand over a copy of the same to the defaulter or the person from whose
charge the property is distrained.
(xiii)
Private alienation to be void in
certain cases: (i) where a notice has been served on a person for
provisional attachment, the said person or his representative in interest shall
not be competent to mortgage, charge, lease or otherwise deal with any property
belonging to him except with the written permission of the Commissioner of
Central Excise.
(ii)
Where a provisional attachment has been made, any private transfer or delivery
of the property attached or of any debt, dividend or other moneys, contrary to
such provisional attachment, shall be void as against all claims enforceable
under the provisional attachment.
(xiv)
Share in property: Where the
property to be provisionally attached consists of the share or interest of the
concerned person in property belonging to him and another as co-owners, the
provisional attachment shall be made by a notice to the concerned person
prohibiting him from transferring the share or interest or charging it in any
way.
(xv)
Property exempt from attachment:
(i) All such property as is by the Code of Civil Procedure, 1908 (5 of 1908),
exempted from attachment and sale for execution of a Decree of a Civil Court
shall be exempt from provisional attachment.
(ii)
The decision of the Commissioner of Central Excise as to what property is so
entitled to exemption shall be final.
3.
Trade & field formations may please be informed suitably.
4. Hindi
version will follow.
F.No.201/51/2004-CX-6
Yours
faithfully,
(Rahul
Nangare)
Under
Secretary to the Government of India
Annexure
Proforma
for forwarding the proposal for provisional attachment of property to the
Commissioner of Central Excise:
1.Name
and address of the assessee/person:
2.
Division and Commissionerate:
3.Central
Excise Registration No.(if any):
4.
Constitution of assessee:
[Proprietorship/partnership/Private
Ltd /Public Ltd/ Other (specify)]
5.Details
of Show Cause Notice:
(i)
SCN No. & date, Issuing authority
(ii)
Brief facts of the case
(iii)
Duty demanded in the SCN
6.Details
of the offence cases in last five years for Central Excise, Customs and Service
Tax:
7.Details
of arrears of duties/ taxes pending realisation for Central Excise, Customs and
Service Tax:
8.Reasons
for provisional attachment of property:
9.
Full details of property proposed to be provisionally attached:
10.
Value of property proposed to be provisionally attached:
11.
Comments, if any:
(
)
Signature & Name of AC/DC
Date: