30th December, 2006
Notification No. 32/2006 - Central Excise (N.T.)
G.S.R. (E).- In pursuance of rule 12CC of the Central Excise Rules, 2002, and rule 12AA of the CENVAT Credit Rules, 2004,
the Central Government, hereby declares that where a manufacturer, first stage or second stage dealer, or an exporter
including a merchant exporter is prima facie found to be knowingly involved in any of the following,-
(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 reasons 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 based on the excise duty paid invoice or other documents which a person has reason to believe
as not genuine, an officer authorized by the Board may order for withdrawal of facilities or impose certain restrictions as
specified in para 2 of this Notification.
2. Facilities to be withdrawn and imposition of restrictions:
(1) Where a manufacturer is prima facie found to be knowingly involved in committing the offences as specified in para 1, the
following restrictions may be imposed on the facilities, namely:-
(i) the facility of monthly payment of duties may be withdrawn and the assessee shall be required to pay excise duty for each
consignment at the time of removal of goods;
(ii) payment of duty by utilisation of CENVAT credit may be restricted and the assessee shall be required to pay excise duty
without utilising the CENVAT credit:
Provided that where a person is found to be knowingly involved in committing any one or more type of offences as specified in
para 1 for the second time or subsequently, every removal of goods from his factory may be ordered to be under an invoice
which shall be countersigned by the Inspector of Central Excise or the Superintendent of Central Excise before the said goods
are removed from the factory or warehouse.
Explanation I.- It is clarified that a person against whom the order under sub-para (3) of para 4 has been passed may continue
to take CENVAT credit; however, he would not be able to utilize the credit for payment of duty during the period specified in the
said order.
Explanation II.- For second time or subsequent offence, the restriction specified in clauses (i) and (ii) may also be imposed.
(2) Where a first stage or second stage dealer is found to be knowingly involved in committing the type of offence specified at
clauses (d) or (e) of para 1, the registration granted under rule 9 of the Central Excise Rules 2002 may be suspended for a
specified period.
Explanation.- During the period of suspension, the said dealer shall not issue any Central Excise Invoice. However, he may
continue his business and issue sales invoices without showing excise duty in the invoice and no CENVAT credit shall be
admissible to the recipient of goods under such invoice.
(3) Where a merchant exporter is found to be knowingly involved in committing the type of offence specified at clause (f) of
para 1, the self sealing facility for export consignment may be withdrawn whereby each export consignment shall be examined
and sealed by the jurisdictional Central Excise Officer:
Provided that any other facility available to a manufacturer, first stage or second stage dealer or an exporter provided by a
circular or an order issued by the Board may also be ordered to be withdrawn for a specified period.
3. Monetary Limit.- The provisions of this notification shall be applicable only in a case where the duty or CENVAT Credit
alleged to be involved in the offences specified in para 1 is more than Rs.10 lakhs.
4. Procedure.- (1)The Commissioner of Central Excise or Additional Director General of Central Excise Intelligence, as the
case may be, after examination of records and other evidence, and after satisfying himself that the person has knowingly
committed the offence as specified in para 1, may forward a proposal to the Chief Commissioner or Director General of
Central Excise Intelligence, as the case may be, specifying the facilities to be withdrawn and restriction to be imposed and the
period of such withdrawal or restrictions, within 30 days of the detection of the case, as far as possible.
(2) The Chief Commissioner of Central Excise or Director General of Central Excise Intelligence, as the case may be, shall
examine the said proposal and after satisfying himself that the records and evidence relied upon in the said proposal are
sufficient to form a reasonable belief that a person has knowingly committed the offences specified in para 1, may forward the
proposal along with his recommendations to the Board. However, the Chief Commissioner of Central Excise or Director
General of Central Excise Intelligence, before forwarding his recommendations, shall give an opportunity of being heard to the
person against whom the proceedings have been initiated and shall take into account any representation made by such
person before he forwards his recommendations to the Board.
(3) An officer authorized by the Board shall examine the recommendations received from the Chief Commissioner of Central
Excise or Director General of Central Excise Intelligence and issue an order specifying the type of facilities to be withdrawn or
type of restrictions imposed, along with the period for which said facilities will not be available or the period for which the
restrictions shall be operative.
F.No.224/40/2006-CX.6
