CHAPTER 13

DEMAND NOTICE/SHOW CAUSE NOTICE, ADJUDICATION, INTEREST, PENALTY, CONFISCATION, SEIZURE, DUTY PAYMENT UNDER PROTEST

PART I

DEMAND NOTICE/SHOW CAUSE NOTICE
1. Introduction

1.1 In accordance with the principles of natural justice the central excise law provides that before any action is taken against an assessee he must be given reasonable opportunity of presenting his case. One such situation would be that relating to the demand of duty not paid, short paid or erroneously refunded.

1.2 As see, a show cause notice is invariable to be issued if the department contemplates any action prejudicial to the assessee. Thus, if on account of an infraction of the provisions of the central excise law it is considered appropriate to penalise the defaulter, it is necessary to first issue a show cause notice. The show cause notice would detail the provisions of law allegedly violated and ask the noticee to show cause why action should not be initiated against him. Thus, a show cause notice gives the noticee the opportunity to present his case.

2. Issue of duty demand notice

2.1 Section 11A of the Central Excise Act, 1944 provides that if excise duty has not been levied or short levied or not paid or short paid, a notice has to be issued demanding the differential duty. This notice will be issued by Commissioner of Central Excise if the amount demanded does not exceeding one crore rupees. Where amount exceeds one crore rupees, prior approval of the Chief Commissioner of Central Excise is required.

2.2 The Board has also empowered the Officers of Director General of Central Excise Intelligence to issue Show-cause notices in accordance with the powers of Central Excise Officers conferred on them under rule 3 and the instruction above.

2.3 In order to provide mechanism for early dispute resolution, it has also been provided in the Act that an assessee may request for waiver of notice, if he deposits the amount of differential duty on his own along with interest in respect of only such cases where such non-levy or short levy or non-payment or short payment is by reason other than suppression of facts, fraud, collusion etc.

2.4 By opting for waiver of issue of notice, the assessee may avoid long drawn process of adjudication and appellate process including interest on the differential duty demanded. It is therefore, advisable that in cases where the assessee is convinced that the Department is correct in demanding duty, he may opt for this facility.

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