Manual of Departmental Instructions On Adjudication Adjudication

Adjudication
Manual 1988

For Departmental use only
MANUAL OF DEPARTMENTAL INSTRUCTIONS ON ADJUDICATION
CHAPTER V
ADJUDICATION
27. General Importance of Adjudication: - Adjudication of offence under

the Central Excises and Salt Act, 1944, or the Customs Act, 1962 are
important functions of the officers of the Central Excise and Customs
competent to adjudge offences. If all innocent persons are punished or the
punishment is more than warranted by the nature of offence it may tend to
jeopardize the happy relationship between the government and the public.
If, on the other hand, a real offender escapes the punishment provided by
the law, it may tend to encourage commission of offences to the detriment
both of the Government and the honest traders. These functions therefore,
cast a heavy responsibility on the officers invested with the powers of
adjudication and confiscation to use it with utmost care and caution, free
from any prejudice or bias, so that the innocent does not suffer by any
injustice done to him and the real offender does not escape the punishment
provided by the law. It is thus important in matters of adjudication to know
and understand the facts of a case, to process them properly, and to
correctly apply the rules and sections of the Act or Notifications that may be
relevant to the facts of each case. Care should be taken to ensure that
wrong sections of acts are not applied to a case which attracts some other
provisions of law.
28. Framing of charges: - The following principles should be observed by

the Central Excise Officers in framing charges and adjudicating offences,
these principles may usefully be adopted with necessary modifications for
adjudication of offences under the Customs Act:
(i) A clear distinction should be drawn between a transaction and an act; a

transaction may involve a series of separate and distinct acts of commission
or omission. Thus disposal of matches without payment of duty constitutes a
transaction which involves the commission of different acts, e.g. (1) removal
without a transport document; (2) falsification of statutory accounts.
www.referencer.in Page 51

Adjudication Manual 1988

(ii) If one and the same act constitutes an offence under two or more rules,
only a single penalty can be imposed in respect of that act under any one of
the rules, which the adjudicating officer may choose to apply, and not a
separate and distinct penalty under each of the rules.
(iii) (a) If in the course of a single investigation, a number of separate and

distinct acts are detected, each such acts may be separately punished in the
manner provided in (ii) above.
(iii) (b) If such acts constitute a single transaction they must be adjudicated
upon together, and while in accordance with (a) above a separate
punishment may be awarded in respect of each such act, the total of the
penalties in respect of all the acts should not exceed the maximum limits
prescribed for the adjudicating officer in section 33(b) of the central Excises
and Salt Act, 1944.
(iii) (c) If on the other hand, the acts constitute more than one transaction,
each set of acts constituting one transaction should be adjudged upon
separately and penalties totaling upto the maximum limits prescribed in
section 33 (b) of the Central Excises and Salt Act, 1944, may, where
necessary be imposed in respect of acts constituting each transaction in the
manner provided in (b) above.
(iv) Where an adjudicating officer considers that a penalty exceeding the

maximum limit prescribed in section 33 (b) of the Central Excises and Salt
Act, 1944, is deserved in respect of acts constituting any particular
transaction, he should refer the case for original adjudication to a superior
officer competent to adjudge the desired penalty.
29. Each consignment for purpose of adjudication of stock taking

losses to be treated as a separate transaction: - When stock taking
losses in warehoused excisable goods are to be adjudicated the difficulty
arises whether each consignment covered by a separate stock-card should
be treated as a separate transaction from the other consignment. in such
cases the loss in respect of each consignment covered by separate stock
card) would be a separate transaction for purposes of the principle contained
in paragraph 28 and should, therefore, be dealt with distinctly and
separately in the adjudication order. There would be no infringement of the
provisions of Section 33 of the Central Excises and Salt Act, if stock taking


losses are adjudicated in a single order of adjudication in the manner
described as item (ii) in paragraph 28.
30. Need for separate adjudication order in cases involving more

than one transaction: - In cases involving more than one transaction a
separate adjudication order should be passed in respect of each transaction.
The mere fact that the investigation of more than one transaction has been
recorded in a single file is not sufficient reason why a separate order should
not be issued in respect of each transaction. The issue of separate orders
facilitates the separate consideration of appeals against each order.
In cases where transactions cannot be separated which would be very few,

the appropriate course is to (i) have them adjudicated by a higher officer
who can impose heavier penalties or (ii) make an express provision in the
order of adjudication for a separate set of penalties in respect of each
separate transaction.
31. Adjudication of offences to which different rules are applicable: -

In cases where more than one rule of the Central Excise Rules, 1944, can be
made applicable in adjudicating an offence, the adjudicating officer may, in
his discretion, apply only such of the rules as may be appropriate and
convenient in any particular case and ignore the others.
31A. Adjudication of the one and the same case twice: - Adjudicating
officers should guard against passing two formal adjudication orders on one
and the same case. The legal position in this respect is that, where a matter
has already been adjudicated by the competent authority and another order
of adjudication is passed relating to the same transaction subsequently, the
second order is a nullity. The authority who undertakes the enquiry resulting
in the second adjudication acts without jurisdiction. The second order being
a nullity, it should be taken as not to exist at all. When the fact of such an
order having been passed is brought to light, the records should be
corrected, the order deleted from the record and the party affected informed
accordingly.
(Board's F.No, 18/18/65-CXIV dt. 29.4.65)
32. Determination of MENS REA in departmental adjudications: - The

penal provisions in the Central Excises and Salt Act, 1944 or the Customs
Act, 1962, mostly do not contain any reference to a criminal intention or
knowledge. The Central Excise and Customs Department are concerned


solely with those penal provisions which do not define offences triable by
Magistrate. Section 33 and 122 of the respective Acts confer upon the
Central Excise and Customs Officers the power to adjudge penalties and
confiscations for contravention of certain rules/sections. In the discharge of
this function, these officers are not required to adopt the procedure
prescribed for the trial of criminal offence or any procedure laid down by
law. Such officers it has been ruled, are purely administrative and executive
authorities and their function is not a criminal prosecution (vide Supreme
Court Judgment in Maqbool Hussain vs. Union of India). The rules in
question are consequently only quasi-criminal prohibitions enacted in the
interest of revenue and defined mostly in absolute terms without reference
to a mental element (mens rea). The authority of the Statute is, therefore,
paramount and mens rea is not a necessary ingredient. Therefore, even if
mens rea has not been established, personal penalties as prescribed in the
Central Excises and Salt Act, 1944 or the rules framed thereunder or under
the Customs Act can still be imposed for any established contravention of
the Central Excise Rules or the Sections of the Customs Act.
32A. Adjudications by the detecting officers: - If the adjudicating

Officer himself happens to detect the case, he should send the case to his
next officer even though the former is otherwise competent to adjudicate the
same. Thus a case detected by a Superintendent though within his
competence to decide, may be sent to the Asstt. Collector in-charge of the
division for adjudication and a case detected the Asstt. Collector (not within
the competence of a Superintendent but within the competence of an Asst.
Collector) may be referred to the Deputy Collector or the Collector as the
case may be for adjudication.
32B. Confiscation of goods: - (1) The expression “shall be liable to

confiscation” occurring in the Rules should not be construed to mean that
the goods must invariably be confiscated though in most cases confiscation
of non-duty paid goods should be ordered as a matter routine. Where,
however, there is no evidence of evasion of duty and there is a clear proof
that duty has been confiscation paid, confiscation should not be necessary.
(2) it should he made clear in the adjudication order that the party will be
entitled to receive back the confiscated goods only if he possesses a valid
licence where one is required. Alternatively, he may have the goods
transferred to a person possessing a licence; he can himself also apply for a
licence if he so desires.


(3) Non-excisable tobacco products not liable to confiscation: - Manufactured
tobacco products other than excisable cigarettes and cigars and cheroots are
not liable to confiscation even if manufactured from tobacco on which duty
has not been paid, or has not been paid at the proper rate. Where such
products are stored in the premises in which they were manufactured, the
penalties provided in the rules may be imposed in the following
circumstances:
(a) If a wholesale dealer’s licence has not been taken out in respect of the
premises; or
(b) If such a licence has been taken out, (i) the licensee is unable to prove
from the accounts maintained in E.B.3 that the products have been
manufactured from tobacco on which the proper duty has been paid or (ii)
such accounts are incomplete or incorrect in any particular or (iii) the
licensee has committed a breach of the terms of licence.
33. Time Schedule for expeditious adjudication of offences and

seizure cases: - (a) In order to effect expeditious disposal of the central
excise offences, the following schedule should be observed.
(i) All reports of arrest, search or seizure should be submitted to the

immediate superior officer within 24 hours of the occurrence. The detecting
officer should submit the case file to the adjudicating officer within seven
days from the date of detection. If, for any reasons, it is not possible to
complete investigation within seven days, he should submit a report to the
adjudicating officer giving reasons and indicating there in the period of
extension required by the officer.
(ii) If a case falls beyond the competence of the officer to whom such case
has been submitted, it should be submitted to the proper adjudicating officer
within seven days of the receipt of the case by the former.
(iii) The adjudicating officer should where necessary issue the show-cause
notice within five days of receipt of the case file. Normally one month time is
allowed for the party to reply find this period should be specified in the
notice. If no reply is received in about 45 days the case should be decided if
necessary, ex-parte. If, however, the case is defective in any respect it
should be returned to the proper officer within five days and a period not
exceeding seven days normally should be fixed for re-submission of the case
file.


(iv) Cases should be adjudicated within five days from the date fixed in the
show-cause-notice for reply. If personal hearing is requested by the party,
the date should be fixed within seven days from the date of receipt of the
reply from the party and the case should be adjudicated within five days
from the date of hearing.
(v) The confiscated goods should be permitted to be redeemed in

accordance with the provisions of paragraph 55B. If the goods are not
redeemed they should be disposed of in auction within one month from the
date of expiry of the period fixed for redemption of goods.
(vi) Effective steps should be taken to ensure that the goods do not remain
in a state of seizure for more than 4 to 5 weeks.
(b) Supervisory Officers like Assistant Collectors, Deputy Collectors and

Collectors should keep a special watch during their inspections to see how
closely the time-table has been maintained. These officers should also make
detailed scrutiny of some of the cases which are being long delayed in order
to give suitable directions to the subordinate officers for dealing with the
cases mere expeditiously.
(c) The procedure contained in this paragraph should also be followed

mutatis mutandis in respect of Customs cases.
34. Form of adjudication order in Central Excise cases: - (i) All

adjudications should be in the following form and should invariably contain a
clear direction setting out the procedure of filing an appeal as contained in
Rule 213 read with Govt. of India, Ministry of Finance (Department of
Revenue) Notification No.55/59; g.S.R.No.8/22) dt. 19.7.59.
ORDER (ORIGINAL)
N.B. (1) This copy is granted free of charge for the private use of the person
to whom it is issued.
(2) Any person deeming himself aggrieved by this order may appeal against
the same to the Collector of Central Excise (Appeals) Customs, Excise and
Gold Control Appellate Tribunal. The appeal must be filed within 3 months
from the date of communication to him of this order and it should bear a
Court fee stamp of Rs. _________ only. It must be accompanied by-


(a) a copy of the appeal,
(b) this copy of the order, or another copy of the order, which must bear
Court fee stamp as below:
(i) if the amount or value of the subject matter is fifty or less than fifty
rupees _________
(ii) if such amount or value exceeds fifty rupees ____________
(3) Any person desirous of appealing agaist the decision or order shall
pending the appeal deposit the duty demanded or the penalty levied therein
and produce proof of such payment along with the appeal, failing which the
appeal is liable to be rejected for non-compliance with the provisions of
section 35F of the Central Excises and Salt Act, 1944/section 129 of Customs
Act, 1962.
(F.No.40/74/65-CXI)
SUBJECT
ORDER
(ii) An original order of adjudication should be self contained and

unambiguous. The order should quote the rules or sections violated, discuss
in brief all the contentions put forward in defence and indicate clearly all the
grounds on which penal action has been taken and should be closely
reasoned. In all such proceedings it is necessary that there should be a
charge (offence against the relevant law), a finding and establishment of the
charge of offence supported by proper offence, as a foundation for imposing
any punishment. It should-
(a) briefly state the essential facts of the case and the issues involved;
(b) discuss each issue separately;
(c) specify the rules or sections of the Act which are held to have been
contravened; and
(d) specify the rules or sections of the act under which the penalty is
imposed or the goods confiscated.
(iii) While discussing the facts of the case in the order of adjudication the
dates of occurrence or any important happenings that may form important
link in the facts of the case, the place of occurrence, the designation of the


officers who seized the goods, etc. or have any other relevance to the facts
of the case must be specifically stated in the order of adjudication. In short
an adjudication order would not be considered to be complete unless it
answers the questions – what, when, where and why?
(iv) General principles of adjudication set out in sub-paragraph (ii) & (iii)
above should be followed in respect of customs cases as well.
(v) A direct penalty may be adjudged in addition to the confiscation of the

goods if the merits of the case so warrant. Orders of confiscation should,
however, invariably prescribe an amount of fine in lieu of confiscation as
required by section 34 of the Central Excises and Salt Act, 1944, the amount
of such fine should not exceed the value (value here means ex-duty value)
of the goods.
38. Demand for Central Excise duty on confiscated goods not to be

included in the body of the adjudication orders: - In respect of those
goods which are confiscated and an option for the redemption of the goods
by the owner on payment of fine in lieu of confiscation has been given and
such goods are also adjudged to be liable to pay the Central Excise duty, the
demand for such duty should not be made a part of the adjudication order
i.e., such demand should not be made a part of the order of confiscation
itself. In such cases a separate endorsement on the following lines may be
made in the forwarding memo:-
"The goods are dutiable and proper duty will have to be paid before they are
cleared."
Officers should, however, take care that the need of insisting upon recovery
of duty on the goods concerned before their clearance will not arise in those
cases where the facility for warehousing the goods -confiscated and
redeemed - is allowed.
36. Offences punishable under the Central Excises & Salt Act 1944
not subject to departmental adjudication: - Offences against the rules
made under Section 37 of the Central Excises and Salt Act, 1944 can be
adjudicated upon by a competent Officer under Section 33 of the said Act. If
however, an offence does not involve contravention of any of the Central
Excise Rules but is otherwise punishable under a section of the said Act;
such an offence is outside the jurisdiction of departmental adjudication and
is triable by a court of law. For example in a case where excisable goods


have been unauthorized removed without payment of duty, from a place
where they are produced, cured or manufactured, action can be taken
departmentally against the producer or manufacturer under Rule 9 (2); if,
however, the Department decides to proceed against such a person for
evading the payment of excise duty then the offence would fall under
Section 9(b) of the said Act and hence outside the scope of departmental
adjudication.
36A. Distinction between confiscation under the Central Excise

Rules, and forfeiture by a Court under Section 10 of the Central
Excises and Salt Act: - In a departmental confiscation the officer is bound
to give an option to the offender to redeem the confiscated goods by paying
a fine in lieu of confiscation but the forfeiture to government ordered by a
Court is absolute and unqualified.
37. Whether warnings are punishments under Section 33 of the

Central Excises & Salt Act, 1944: - There has been a practice in some
Central Excise Collectorates to administer warnings in certain small cases of
offences against Central Excise Rules and such warnings have been issued in
regular adjudication forms. This is a wrong practice. Since there is no
provision either in the Central Excises and Salt Act or the Rules made
thereunder regarding warning, they are not punishments within the meaning
of Section 33 of the said act. To administer a warning is purely an
administrative act and, therefore, is also not appealable. Warning therefore,
should not be included in a formal adjudication order under Section 33 of the
said Act, but be issued in a simple memo form if administration of such a
warning is at all considered to be necessary.
38. Quoting of Rules and the method of calculation of differential

duty in Demand Notices: - Issue of demand notices for differential duty is
not an act of adjudication, yet it is considered necessary to caution the
officers against omission of the relevant rule under which demand is made
and of the method of calculation of such duty. These omissions sometimes
are challenged at appeal stage and become an unnecessary subject matter
of legal arguments. Although the mere omission of the rule in the demand
notices does not by itself vitiate the demand if the demand is otherwise
sustainable under the law yet such omissions may lead to unavoidable and
unnecessary correspondence with the parties concerned who may like to
know the rule under which the demand for duty is made. All officers, while
issuing the demand notices for differential duty should, therefore, take care


to safeguard against such an omission. The relevant rule or rules under
which the demand for differential duty is made and also the particulars
including the quantity of goods and method by which the demand has been
computed must always be quoted in the demand notices; care should also
be taken to quote correct rules.
39. Quoting of number and date of Board's orders in correspondence

with the trade: - The number and date of circular orders of the Board or of
the Ministry of Finance (Deptt. of Rev.) other than those which are published
such as notifications, etc. should not be cited in the circulars/instructions,
which are issued to the trade by the Collector of Central Excise or the
officers subordinate to him. There has also been an unwholesome practice in
certain Central Excise Collectorates to quote the number and date of the
Board's letter in certain correspondence with the trade. The Central Board of
Excise and Customs in addition to being an executive authority is also an
appellate authority. On many occasions the Collectors of Central Excise ask
for certain clarifications from the Board either on points of law or
interpretation of rules. Sometimes references are also made whether in
particular circumstances of a case refund of duty may or may not be granted
to a party. The Central Board of Excise and Customs decides these matters
and issues directions in its capacity as an executive authority. The Collectors
and the officers subordinate to them while rejecting the claims of refund or
other request of the trade quote the number and date of the Board's letter.
The communications that are issued by officers to the trade have been found
to be somewhat on the following lines:
"The Central Board of Excise and Customs has been pleased to direct that or
has been pleased to reject the claim of refund of " ________ etc. ________
etc."
All orders in such matters even if they are issued after taking advice from
the Central Board of Excise and Customs should be issued in the name of the
Collectors or its subordinate officers as the case may be and the letter
number and date of the Board’s office should not be quoted therein unless a
specific permission for doing so in any particular case is obtained from the
Board. Since any order or decision taken by a central Excise officer s
appealable under section 35/35b of the Central Excises and Salt Act, 1944,
quoting of boards letter number and date in any orders issued by the
Collectors or their subordinates and communicated to the trade may create
legal complications if the party concerned files an appeal against such


orders. All the Collectors of Central Excise and the officers subordinate to
them should, therefore, strictly follow the instructions contained in this
paragraph.
Where a reference has been made by the Board/Department of Revenue to

the Law Ministry for any advice/opinion, such advice/opinion should be
treated as “confidential” as it is intended only for the use of the Government
only. It should be ensured that the advice/opinion of the Law Ministry is not
quoted on any order passed by any adjudicating authority. In order to
maintain the necessary degree of secrecy the advice/opinion should not be
communicated verbatim as a matter of course even to the field formations
by the Collectors. How this is to be done is of course is left to the discretion
of the Collectors themselves. It should also be ensured that it is not
communicate or allowed to fall into the hands of the trade in whatever
fashion.
40. Observance of the Principles of natural Justice in Departmental

adjudication: - (1) The principles of natural justice required to be followed
in departmental adjudication has already been stated in Chapter III and IV.
However, at the time of actual adjudication of the case the officer
adjudicating it should ensure before the order is dispatched that all the
principles of natural justice have been followed and that no defect on this
account remains in the order because if any of those principles is not
observed the validity of the adjudications may be challenged on that ground.
In a case the Madras High Court passed judgement that as the adjudication
order passed by the Collector of Customs, Madras was inconsistent with the
principles of natural justice, the adjudication proceedings were vitiated by
non-observance of those principles. In order to make the position clear to
the officers it would be better to state the case in brief. The case was that
M/s. Rainbow trading Co., Bangalore, imported certain consignments of
electric bulbs under the guise of "electrical goods”. As a result of enquiries
made in the open market and test of the representative samples drawn from
the consignments by the Madras Institute of and the of Engineering, Gundy,
it was held that the bulbs imported were not different in any respect in their
construction of filament from those of flash light bulbs for torches. The
Collector while adjudicating confiscation of the goods referred in the
adjudication order to the result of the aforesaid test. Since, however, the
party was not given an opportunity to rebut the result of the test; the High
Court held that this fact, being inconsistent with principles of natural justice,


vitiated the adjudication order. The position might have been different if the
Collector had not quoted the result of the test in the adjudication order. The
result of the test should have been used by the Collector for his own
information only in arriving at a proper judgement without quoting the same
in the adjudication order. In cases, therefore, where the Collector or any
other departmental adjudicating authority makes a confidential enquiry or
receives secret sources of information, it is best not to mention them in the
order of adjudication, such secret information should only be used as a guide
for further investigation and no material can be relied on to support a finding
unless the party has had an opportunity to rebut the conclusion that flows
from said material or bring forward other material for the purpose. All
adjudicating officers should, therefore, bear in mind that no material should
be quoted in the adjudication order which has been relied on to support a
finding against the interests of the party unless the party had been given an
opportunity to rebut that material.
(2) Extracts taken from the order passed by Shri B.K.Agarwal,

Director (audit) against M/s. ITC Ltd.
17.1 Before parting with the case, I must also discuss the company's
arguments regarding principles of natural justice and burden of proof. The
company has submitted that the principles of natural justice import within it
a prime requirement that witnesses whose statements are sought to be
relied upon by the authority holding the enquiry, should be permitted to be
cross examined by the party affected. This is an extremely well settled
position in law on the pronouncement of the Supreme Court, High Courts
and the Appellate Tribunal. For instance in the case of Kishanchand
Chelliram AIR 1980 S.C. 2117, the Supreme Court has held that witnesses
whose statements have been relied upon by the department has to be
produced for cross-examination and a failure to produce the persons for
cross examination results in a denial of a reasonable opportunity to show
cause and the orders passed by the assessing authorities being in breach of
the principles of natural justice are bad ab-initio. Similarly, the Delhi High
Court in its judgement reported as 1978 E.L.T. 500 and 1978 E.L.T. 502 has
held that failure to produce persons for cross-examination to establish the
truth/false hood vitiates the order passed by the Excise authorities as it is
passed in breach of principles of natural justice. Similarly, in the case of
Walker Anjania vs. Collector of Central Excise, the Appellate Tribunal also
has held that the person must be produced for cross-examination and failure


to so produce them is a violation of principles of natural justice. The
company submits that in the alternative, the statements and documents on
which purported reliance was being placed if not proved, in accordance with
the law by tendering the witnesses for cross-examination, shall be
disregarded. Further, it is well settled in law that the burden of establishing
the essential ingredients of taxation is on the department and this burden
has to be discharged by producing satisfactory evidence.
17.2 I have given careful consideration to the above admissions. There

cannot be two opinions that observance of the principles of natural justice in
quasi judicial proceedings is a must. in the City Coroner’s case – AIR 1976-
SC 143, the Court observed that it is now well settled that observance of
principles of natural justice is the requirement of law even where the statute
in question itself does not so provide. However, it is also well established
that the principles of natural justice do not necessarily conform to a fixed
formula, nor is it Procrustean bed into which all proceedings must be fitted.
In 1977-CRI-LJ (NCC156): 176 Ker II 660 the Court observed that rules of
audi alteram partem are not neatly cut and dried or nicely weighed and
measured. What is a fair opportunity must of necessity depend upon the
facts and circumstances of each case, the constitution of each tribunal and
the provision of law applicable to it. The requirements of natural justice thus
vary from case to case and they are not rigid or fixed rules. Similarly, in
1976 Cri LJ (NOC) 67: 1977 JSCTL 147 (Cal.) the Court held that the
principles of natural justice do not require that there should be a kind of
formal cross-examination and formal cross examination is procedural justice.
The evidence of the persons on which the authorities relied rested mainly on
what transpired on the inspection of the car and on records. The petitioners
had opportunity of offering their explanation with regard to the same as the
entire evidence was sought to be made available to the petitioners who were
allowed to have inspection of the same and also take copies of the same.
Any formal cross-examination of the said witnesses could hardly improve
matters and refusal of the right to cross examine the witnesses formally in
the facts and circumstances of this case did not constitute any violation of
the principles of natural justice and did not deprive the petitioners of any
reasonable opportunity of making their representation.
17.3 In the case of Mahendra Nath Chatterjee vs. Collector of Central Excise
and others – 1977 Tax LR 1754-1977 CENCUS 43-D – Calcutta High Court
observed that the mere fact that the petitioner was not given an opportunity


to cross examine was not violative of the principles of natural justice. The
right to cross examine is not necessarily a part of reasonable opportunity.
Whether in a particular case a particular party should have the right to cross
examine or not depends upon the adjudicating authority who is not guided
by the rule of evidence as such. He must, however, afford such opportunity
as would ensure to the party concerned proper opportunity to defend
himself. It is well known that in these matters the revenue excise authorities
are entitled to make their independent enquiries and to rely upon such
enquiries provided the result of such enquiries are communicated to the
person concerned against whom such enquiry is sought to be relied on and
he is given an opportunity to rebut or contradict any evidence adduced by
such enquiry.
17.4 In the case of Kishan Lal Agarwalla vs. Collector of Land Customs AIR
1967 Cal 80, the Calcutta High Court made the following observation:
“There is a good deal of misconception on the question of right of cross

examination as part of natural justice. Natural justice is in fact becoming the
most unnatural and artificial justice and for that confusion the courts are no
less responsible than the litigants. Ordinarily the principles of natural justice
is that no man shall be a judge in his own cause and that no man should be
condemned unheard. This latter doctrine is known audi alteram partem. It is
on this principle that natural justice ensures that both sides should be heard
fairly and reasonably. A part of this principle is that if any evidence is placed
on record against a person then that evidence on record must be placed
before him for his information, comment and criticism. This is all that is
meant by the doctrine of audi alteram partem, that no party should be
condemned unheard. No natural justice requires that there should be a kind
of formal cross examination. Formal cross examination is procedural justice.
It is governed by rules of evidence. It is the creation of Courts and not a
part of natural justice but of legal and statutory justice. Natural justice
certainly includes that any statement of a person before it is accepted
against somebody else, that somebody else should have an opportunity of
meeting it whether it is, by way of interrogation or by way of comment does
not matter. So long as the party charged has a fair and reasonable
opportunity to see, comment, criticize the evidence, statement or evidence
on which the charge is being made against him, the demands and the test of
natural justice are satisfied. Cross-examination in that sense is not the
technical cross-examination in a court of law in the witness-box. If the


Collector of Land Customs were to convert himself into a regular Court of
law hearing formal cross-examination and applying the Evidence Act and the
Civil and Criminal Procedure Codes in this manner as Court of Law then of
course it will be physically and literally impossible for him to function as
Collector of Customs.”
17.5 The above view point was reiterated in another judgement of the same
High Court in Matter 446/75 dated 11.2.76 wherein their lordships observed
-"in the instant case of non-production of the witnesses for formal cross-
examination by the petitioners at the enquiry does not, in my opinion,
constitute any violation of the principles of natural justice and does not
amount to a denial of reasonable opportunity to the petitioners. The gist of
the evidence of this person on which the authorities wanted to rely in the
instant case had been communicated to the petitioners and the petitioners
were also allowed the opportunities of inspecting the entire records and of
making copies of the same. It cannot, therefore, be said the adjudicating
authority relied on any material which was not made available to the
petitioners. It was essentially for the petitioners to offer their explanation
with regard to the statement of evidence and the petitioners had ample
opportunity of doing so. Principles of natural justice do not require that there
should be a kind of a formal cross-examination and formal cross-
examination is procedural justice.”
(3) Grant of personal hearing before a refund claim is

rejected/modified: -Where under Section I1B of the Central Excises and
Salt Act, 1944 a refund claim (including a rebate claim) is sought to be
rejected or modified, it is necessary for the Asstt. Collector to comply with
the principles of natural justice. Hence, all cases of rejection or modification
of refund claims should be decided after issue of show cause notice and/or
grant of personal hearing. The adjudication order passed in such cases
should be a speaking order clearly stating the grounds on which the refund
claims has been rejected or modified.
40A. Recommendations by the office Assistants or other

subordinates for the final decision of the Cases: - An officer when
adjudicating a case under the Central Excise Act and Rules or the Customs
Act, acts in a quasi-judicial capacity and that he should, after the enquiry,
take an unbiased decision in each case applying his own mind to the
materials disclosed in enquiry independently. From this point of view, any
positive suggestion in regard to the penalty etc. whether in an office note or


elsewhere is liable to be regarded as an interference with the functions of
the Adjudicating Officer thereby vitiating the decision. Office notes should
not, therefore, go to the extent of recommending the final decision or the
actual penalty, in the adjudication of offence cases,
40B. Passing of conditional orders in adjudication and appeals: - In

cases where some verification is required to be carried out by the field
formations and which is likely to affect the very nature of the order,
conditional orders should not be issued and in such cases the
adjudicating/appellate authority first get the facts verified and pass orders
thereafter. However, in cases where the verification required by the field
formations is only of a formal or arithmetical nature and is not likely to affect
the basis of the order, the conditional order could be issued.
41. Determination of competent adjudicating authority in cases

where the Excisable goods are non-existent on the question whether
value of such goods or magnitude of the offence should be the
Criterion: - The value of goods is not relevant for the purpose
determination of the competence of the adjudicating authority when it is not
proposed to confiscate the goods either because the goods are not available
for confiscation or for any other reason. The amount of penalty to be
imposed must, however, be within the powers of that authority. The value of
goods involved, no doubt, may be criterion for imposing a heavier penalty
and if the proper amount of the penalty is beyond the competence of the
authority concerned, the officer should refer the case to his superior with a
forwarding note to that effect.
42. Whether on transfer of the officer who recorded decision on the

file his successor can issue the formal order of adjudication without
rehearing the party: - When an adjudicating officer is likely to be
transferred or promoted, it should be ensured that in all cases, where a
hearing has been given on request, but formal orders have not been issued,
the drafting of these orders is also on a top priority basis so that formal
orders in all such cases are issued by the outgoing officer before
relinquishing charge. If despite this precaution, odd cases remain un-
disposed the successor in office should offer a fresh hearing to the party as
mentioned in Para 26 before issuing the formal order. A special mention of
such cases should be made in the handing over notes of the outgoing officer
so that they do not escape the notice of the successor. (F.No.100/1/62
L.C.I.)


43. Provisional release of things seized pending adjudication on
deposit of security-execution of bond: - (i) According to sub-rule (3) of
Rule 206 of Central Excise Rules anything seized by a Central Excise Officer,
may, pending the orders of the adjudicating Central Excise Officer, be
released to the owner on taking a bond from him in the proper form with
such security as the Collector may require. As prescribed in the said "rule,
seized goods, irrespective of the value thereof, can, pending adjudication”
be released to the owner, if he so desires on taking a bond from him in Form
B-II (Sec.) with sufficient security. As a working rule, the option to take
delivery of the seized goods before adjudication or to leave the goods in the
custody of the Department till adjudication should be left to the owner. If,
however, the officer competent to grant release under Rules 206(3) thinks
that by releasing the goods provisionally some important evidence material
and relevant to the case would be lost, such officer may, in his discretion
refuse to grant such release. This procedure should be made known to the
party concerned every time a seizure is made and the two alternative modes
of dealing with the seized goods should be specifically brought to the notice
of the owner, soon after the seizure, by the seizing authority. A practical
difficulty may arise when at the time of it is felt necessary by the
adjudicating authority to confiscate the goods in question, if they had
already been released to the owner. The question will then arise as to how
goods which have already been released and which are not in the custody of
the Department can be formally confiscated. In order to overcome this
difficulty the adjudication order may contain inter alia, the following:
"……………….. that the goods are liable to be confiscated but as the

goods were released provisionally to the owner, before Adjudication, the
owner was asked to produce the goods in terms of the bond within …………..
On his failure to produce the goods in terms of the bond I appropriate an
amount of Rs. ……….. towards duty Rs. ………… towards value and Rs. …………..
towards penalty and Rs. ………… towards other charges due on the excisable
goods released. The balance amount of Rs. …………….. is ordered to be
refunded."
(ii) The power of the Collector to release seized goods pending adjudication
on execution of bond in Form B.II (Sec.) with suitable security under Rule
206(3) of Central Excise Rules has been delegated to officers competent to
adjudicate the case. The bond, should however, be accepted by the
Superintendent of Central Excise. The competence of the adjudicating officer


should be determined with reference to the value of the goods liable to
confiscation as a whole including vehicles used in the transportation of
goods, notwithstanding the amount of fine (in lieu of confiscation of the
conveyance) which may be fixed by the adjudicating authority.
(F.No.35/11/65CXI). The Offices releasing the goods should take care that,
while determining the amount of the deposit they bear in mind the
seriousness of the offence, the value of the goods seized and whether the
goods are duty-paid or not. Care should also be taken to ensure that by
releasing the goods some valuable evidence in the case is not extinguished.
(iii) Considering the inconvenience to the parties and the department in the
case of petty seizures, the goods may be released provisionally by the
detecting officer himself in cases where the value of the goods does not
exceed Rs. 50. The provisional release can be ordered by the Inspector or
Superintendent in charge of the Range subject to the conditions that the
owner of the goods makes a deposit equal to the probable amount of duty
and other charges leviable thereon, and also give an undertaking similar to
clause (c) of B.II (Security) Bond on the receipt given by him for the
provisional release of such goods, pending adjudication (F.No.8/4/62-CX.II).
44. Power of adjudication of Central Excise Officers: - The officers

mentioned in Col.2 of the table below have been authorised to exercise the
powers indicated in CoI.3 under the authority quoted in Col. 4 thereof:
S. No. Officers Powers Authority
1. 2. 3. 5.
Powers indicated in
Collector of Central Section 33 (1) of C.Ex. &
1. clause (a) of Sec. 33
Excise Salt Act, 1944.
of the Act.
Powers indicated in C.B.R. Notification No.

Deputy Collector of
2. clause (a) of Sec. 33 12-C.Ex. dt. 17th May,
Central Excise
of the Act. 1947.
Assistant Collector of C.B.R. Notification No.8-

3. -do-
Central Excise C.Ex. dt. 2nd Sept., 1944
Supdts. of Central C.B.R. Notification

4. -do-
Excise No.93/59 dl 28.11.59.


Except for Collector of Central Excise, the Central Board of Excise and
Customs, by virtue of their executive authority under the proviso to Section
33 of the Central Excises & Salt Act, 1944, have limited the actual exercise
of the powers of the Deputy Collectors, Assistant Collectors and
Superintendents of Central Excise as set out in the Succeeding paragraph. In
actual practice, therefore, these officers should exercise their powers in the
restricted sphere shown in the next paragraph.
45. Restrictions in the power of adjudication of Central Excise

Officers: - (i) The Central Board of Excise and Customs have ordered that
the power of adjudication conferred as indicated in the preceding paragraph,
on the officers of Central Excise should, for the present be exercised only to
the extent indicated below.
(A) Where there is alleged or potential evasion of duty the powers of

adjudication will be as under:-
S. No. Rank of officers Amount of duty involved
Power indicated in clause (a)

1. Collector
of Section 33 of the Act.
2. Additional Collector Rs.2 lakhs.
3. Deputy Collector Rs. One lakh.
4. Asstt. Collector Rs. 25,000/-
5. Superintendent Rs.5,000/-
NOTE: Where there is a series or set of connected cases the amount of duty
involved for determining jurisdiction will be calculated with reference to the
entire series or set of connected cases.
(B) Where there is no alleged or potential evasion of duty, all cases would be
decided by the Divisional Assistant Collector. The penalty imposed should
depend upon the gravity of the offence and should also be such so as to act
as a deterrent for future.
(C) Where the case to be adjudicated relate to:-
(a) loss of goods, where the loss occurs in transit from a factory to a
warehouse or to another factory, or from one warehouse to another, or


during the course of processing of the goods in a warehouse or in storage,
whether in a factory or in a warehouse;
(b) a rebate of duty of excise on goods exported to any country or

territory outside India or on excisable materials used in the manufacture of
goods which are exported to any country or territory outside India;
(c) goods exported outside India (except to Nepal or Bhutan)

without payment of duty:
The power of adjudication would not be those as detailed above in (A) and
(B), but would be as under: -
Rank of Officer Amount of duty involved
Dy. Collector Without limit
Assistant Collector Upto Rs.20,000/-
While working out the amount of duty involved, aggregate of all duties of
excise should be taken into consideration.
(D) Enhancement of powers of adjudication of Additional Collectors.
Consequent upon the amendment made to Section IIA on 27.12.1985, the

following Instructions were issued by the Board:
(i) F.No.4/20/85-CX.I Dated 30.12.1985
(ii) F.No.208/4/86-CX.6 Dated 19.9.1986
(iii) F.No.4/3/87-CX.I Dated 21.7.1987
These instructions required only the Collectors to issue and adjudicate show
cause notices whenever allegations of suppression or mis-declaration of
facts, fraud, collusion etc. were made in the show cause notice. These
instructions resulted in the transfer of a large number of adjudication cases
from subordinate officers to the Collectors due to which they could not
devote adequate time and attention to other technical and administrative
matters.


2. The matter has been considered by the Board. Since the definition of a
Collector of Central Excise includes the Additional Collector of Central Excise
also, it was felt that show cause notices in the above cases could also be
issued by the Additional Collectors. It has therefore been decided by the
Board that henceforth Additional Collectors may issue and decide show
cause notices under section IIA and under rule 9(2) in those cases where an
allegation of suppression of facts mis-declaration fraud, collusion etc. has
been made and the duty involvement is not more than Rs. 5 lakhs, Cases
where the duty involvement is more than Rs. 5 lakhs would continue to be
dealt with at the Collector's level.
3. Board's instruction F.No.4/20/85-CX.I dated 30.12.1985, F.No.208/4/86-

CX.6 dated 19.9.1986, F.No.4/3/87-CX.I dated 21.7.87, F.No.208/3/85-CX.6
dated 26.3.1985 and F.No.202/26/85-CX.6 dated 12.5.1987 may be deemed
to be modified to the above extent.
(F.No.208/45/87-CX.6 dated 7.4.88)
(ii) Composition of offences: - The Collector or such other officer to

whom the powers of Collector under Rule 210-A of Central Excise Rules,
1944, may be delegated, may accept from any person whose property is
liable to confiscation under the Central Excises and Salt Act, 1944, or who is
reasonably suspected of having committed an offence under the said Act or
under the Central Excise Rules, a sum of money not exceeding Rs.2,000 in
lieu of confiscation of goods or of punishment for breach of any provision of
the said Act or of the said Rules. Compounding is a kind of an agreement
between the two parties (here the department and the person concerned) to
settle a matter by mutual consent, the person concerned as well as the
department lose their further rights, if any, conferred by the Act or the Rules
- the former loses the rights of appeal conferred by section 35 of Act and the
latter the right of instituting any proceedings against the person in respect of
the compounded offence. Since an order of composition of an offence is not
appealable under Section 35 of the Act, officers should take care that the
usual preamble to the Adjudication Order is not included in the order of
Composition of offences issued under Rule 210-A. Similarly it should also be
noted that the usual Show-Cause-Notice is not issued in respect of matters
relating to composition of offences, the form prescribed in Appendix IV
should be used in such cases. Officers should be careful to see that the sum
of money offered or accepted to compound an offence is adequate to justify


compound offence because once an offence is compounded under Rule 210-
A no penal proceedings against the party in respect of that offence can be
instituted. The offer of composition of an offence may emanate either from
the party or from the department. Where, however, the offer of composition
of an offence is made by the department, the sum of composition money
acceptable to the department must be mentioned in the notice issued to the
person concerned in order to enable him to decide whether it would be
worthwhile for him to have the offence compounded for the sum of money
mentioned in the notice. The following officers are authorized to compound
the offences under Rule 210-A.
S. Rank of Officer Value of goods Amount of Composition

No. fee that can be accepted
1. Deputy Collector Without limit Not exceeding Rs.1500/-
2. Asstt. Collector Not exceeding Not exceeding Rs.750/-

Rs.5000/-
3. Superintendent Not exceeding Not exceeding Rs.250/-

Rs.1000/-
It may be mentioned that Rule 210-A gives power to accept a sum of money
not exceeding Rs. 2,000/- in lieu of confiscation of property or of
punishment for breach of any provisions of the Act or the Rules. Under this
rule the Collector does not accept the sum of money in lieu of the duty
payable by the person with whom the composition is made. The liability to
pay duty does not therefore cease with the composition of the offence.
46(1). Proper Officer under Rule 9: - Where the extended time limit of 5
years is invoked under Rule 9(2), the proper officer would be the Collector of
Central Excise. In other cases where normal time limit of six months is
invoked, the cases would be adjudicated the proper officer as given in para
45 above.
46(2). Proper officer for sanctioning sugar rebate: - Cases have come
to the notice of the Board where sugar rebates have been sanctioned by the
Chief Accounts Officer. Sugar rebate is a refund for Central Excise purposes


and as per section IIB of the Central Excises and Salt Act, it is the Assistant
Collector who is the authority for sanctioning such refunds/rebates.
Therefore Board desires that henceforth all sugar rebate claims should be
sanctioned only by the jurisdictional Assistant Collectors of Central Excise.
(F.No.210/47/87-CX.6 dt.28.12.1987. Cir.No.46/87
46(3). Refund under Section IIC - Instructions regarding: - A case

has come to the notice of the Board wherein a notification under Section 11C
was issued not to collect duty for certain period in accordance with the
general practice of non levy of duty on an excisable product. However some
assessees had paid the duty on the product during the relevant period. The
question that arose was whether the assessees who had paid the duty would
be entitled for refund.
2. The matter was referred to Law Ministry who have opined that refund
would not be admissible once the duty has been paid. The Board has
accepted the advice of the Law Ministry.
3. Pending cases may now be disposed of on the basis of these instructions.
(F.No.21018/86-CX.6; 24.2.1988
(Cir.No.13/88)
47. Dispatch of Adjudication Order by Registered Post

Acknowledgement Due: - (1) Every adjudication order should be sent to
the party concerned by registered post acknowledgement due and the
acknowledgement receipt when received should be kept on the relevant file.
If there is any unreasonable or undue delay in the receipt of the
acknowledgement of the party, the matter should be taken up immediately
with the Post Office concerned. Acknowledgement receipt of the party is an
important document as it shows the actual date of receipt of the adjudication
order and computation of the period of appeal is to be made from this date.
(2) Instructions should be issued by the Collector to the staff to keep a

proper track of acknowledgment cards when received back from postal
authorities and for placing them in the proper files on their receipt in order
to have a record about the dates of actual receipt of the Adjudication Orders
by the parties. For the sake of immediate identification of such
acknowledgment cards, the concerned branch may stamp such


acknowledgement due cards indicating "Central Excise Adjudication Branch”,
“Customs Adjudication Branch” or “Gold Control Adjudication Branch” at the
time of despatch so that the cards when received back from the postal
authorities may be delivered to the branches concerned immediately on their
receipt. It is felt that the practice of serving the Adjudication Order through
the postal authorities may be continued. However, in important cases the
Collector/Additional Collector can decide that the Adjudication Orders may
be served through the local range offices. It may be mentioned that in such
cases, another copy of the order should not be sent through postal
authorities in order to avoid confusion as regards the date of actual receipt
of the order by the party which is very much material in case an appeal is
filed by the party. But, a proper receipt signed by the party should be
obtained and placed in the file.
47A. Despatch of orders to Counselor Advocates: - In cases where a

valid 'Vakalatnama' is filed and a Counsel or an Advocate appears on behalf
of the party, the Counselor the Advocate becomes the authorised
representative of the party for that case. So long as the (Vakalatnama
remains unrevoked by the party, the proper course would be that all
correspondence in that particular case should be conducted with the
authorised Counsel and copy of the order meant for the party should also be
sent through him.
47B. Sending of copies of adjudication orders etc. to the Company

Law Board: - Every important adjudication order/order in appeal involving
the company where the adjudication and the penalty, fine and duty (taken
together) amounts to Rs. one lakh or more should be sent to the Company
Law Board at their address Company Law Board, Ministry of Law, Justice and
Company Affairs, Shashtri Bhavan, Dr. Rajendra Prasad Road, New Delhi –
110 001.
(Circular No.13/79, F.No.207/9n8-Cx.6)
48. Demand for Duty on Losses Occurring in Warehouses: - Rule 140

of Central Excise Rules, is a procedural rule conferring upon the Collectors of
Central Excise the power to appoint or to license warehouse. The rule by
itself does not authorise collections of duty on deficiencies. It is, on the other
hand, rule 160 that is appropriate in the matter of demanding duty on any
deficiency of excisable goods found in the warehouse either during storage


or resulting from various processes allowed under rule 143; duty in the
departmental adjudication, should therefore be demanded under rule 160.
49. Rate of duty in case of clandestine removal: - For determination of

tariff valuation or the rate of duty under rule 9A in cases of unauthorised,
illegal or clandestine removal of goods, if the date of removal of goods is
known then it would be determined under clause (ii) of sub-rule (1) of rule
9A. Where, however, the date of removal is not known then duty liability will
be determined in terms of sub-rule/s) of rule 9A.
49A. Release of confiscated goods beyond the time limit prescribed

in the order-in-original/Order in appeal - clarification regarding: -
For release of confiscated goods on payment of fine in lieu of confiscation
beyond the time limit specified in the order-in-original/order-in-appeal the
instructions contained in Gold Circular No.3/83 dated 3.6.1983 would
mutatis mutandis apply to Central Excise cases also, except as regards to
perishable goods.
Accordingly, in cases where the party(ies) has/have gone in appeal, the time
limit specified for redeeming the goods in the order-in-original will have no
relevance as the same is under challenge before the higher authority. Where
the party has not gone in appeal, as the statutory limit for filing the appeal
is three months, the party is eligible to get the goods redeemed within the
appeal period, irrespective of the time limit specified in the order-in-original.
In any case wherever any time/limit is fixed by the adjudication officer or
appellate authority for payment of fine it is desirable to use the expression
(or any extended time limit as may be fixed by me (i.e. the adjudicating or
appellate authority).
The above instructions are based on the advice of the Law Ministry
after the judgement of Kerala High Court in O.P. No.7198/81 (Surya Kumar
Sheti Vs. Union of India and others case) was brought to their notice.
50. Issue of Demand Notice under Rule 160 of the Central Excise
Rules, 1944: - To 'demand' is to ask for a thing as of right or peremptorily
or urgently. The words "as of right" are significant and should be noted. To
'Adjudicate' is to decide upon the claim etc. This imports the requirement of
giving the person concerned an opportunity to show cause. Therefore, an
initial demand of duty that the officer might feel is due under rule 160 may
be raised coupled with a show-cause notice to the party after which the


officer should make the final demand in the light of the cause shown by the
party.
51. Whether non-observance by the trade or licencee of

supplementary instructions issued under rule 233 of Central Excise
Rules is punishable: - The Central Board of Excise and Customs and the
Collectors of central Excise have been authorized by rule 233 of the Central
Excise Rules to issue written instructions providing for any supplemental
matters arising out of the Central Excise Rules, 1944. Failure to conform to
the instructions issued under this rule is not a breach of any substantive
rules of Central Excise Rules. Non-observance of the instructions issued
under this rule cannot, therefore, be penalized under section 33 of the
Central Excises and Salt Act, 1944.
52. Publication of the Orders and Notification Issued under Rule 233
of the Central Excise Rules in the Gazette of India: - All notifications
and supplemental instructions issued under rule 233 or any other rules of
Central Excise Rules should be published in the Government of India Gazette
and not State Gazette.
52A. Publication of names of offenders in the Gazette: - The names of

offenders are required to be published under section 3, part II of the Gazette
of India. In this regard reference is invited to the Ministry of Home Affairs’
Office Memorandum No.4/21/57-Public-I dated 13th January, 1958
(Appendix-10).
53. Date from which Notifications and Orders issued under Central
Excise Rules etc., take effect: - In order to avoid unnecessary disputes
and adjudications resulting from bringing into effect on a wrong date of
various notifications, Rules, Acts passed by Parliament or Ordinances issued
by the President it is necessary for the officers to know the dates from which
these Rules, Notifications, etc., should take effect.
(i) Acts passed by the Parliament and Ordinances issued by the

president: - Unless otherwise provided for in such situations, all acts
passed by the Parliament and Ordinances issued by the President come into
effect on the date on which they receive the assent of the President.
(ii) Rules made under the Acts such as the Central Excise Rules,
amendments to Rules, Notifications in the gazette of India issued by
the Govt., under the Act or Rules: - Unless the operative date is specified


by the Notifications of Rules, all such Rules and Notifications issued under
this item become effective only from the date on which they are published in
the Gazette of India and not from the date on which they were signed by the
appropriate authorities.
(iii) Notifications and supplemental instructions such as under rule

233 or under any other rule of Central Excise Rules, issued by the
Central Board of Excise and Customs and Collectors: - The same as
under item (ii) above.
These principles are applicable on the Notification etc., issued under the
customs side as well.
54. Eligibility of Carrier of Excisable goods to render assistance to

Central Excise Officer under rule 227 of the Central Excise Rules,
1944: - Officers of Central Excise who are authorized to stop and search
vehicles for excisable goods in transit or at any check post cannot compel
the drivers of the conveyances to weigh the consignments under rule 227 of
Central Excise Rules, 1944. The strict legal position is that Rule 227 refers to
only to licecees and goods lying in the licenced premises and could,
therefore, be invoked only when the owner or an agent of the licencee
refused to co-operate in weighing goods lying in the licenced premises. The
truck driver is only authorized to carry the goods and deliver them at the
destination and cannot be treated as agent in respect of the goods for all
any other purposes of the Central Excise Rules. The power to stop a vehicle
is derived from rule 200 of the Central Excise Rules. Under rule 202, the
Central Excise officer may require any person, who has the immediate
possession, control or use of any conveyance etc., to open or allow access to
inspect or examine the excisable goods for the purpose of examination and
check. If any person fails to comply with this requirement he can be
proceeded against under rule 202(2). It is also provided under the rule
202(2) that the cost incurred in this behalf shall be recoverable from the
person concerned as an arrear of land revenue. The proper rule which can
be invoked against the driver, therefore, is rule 202. Notwithstanding this
legal position the Central Excise Officers should exercise discretion and not
indiscriminately insist on unloading all packages carried in all vehicles and
weigh them. In cases of suspicion they should use their discretion and take
the vehicles to the nearest convenient point for purpose of weighment. In
cases the checks have to be made in highway the officers should equip


themselves with weighing scales. They should also as far as possible arrange
for labour. All that the department should expect of the truck driver is to
give facilities to check the consignment or to take to the nearest point where
facilities exist.
55. Competent authority for adjudication of an offence committed in

one Collectorate but seizure of goods made in another Collectorate: -
(i) If excisable goods are dispatched from one Collectorate to another and it
its discovered at the place of destination that the goods were dispatched by
the consignor in contravention of certain provisions of the Central Excise
Rules, 1944 which rendered such goods liable to seizure, it is the officer in
whose jurisdiction the offence was committed (place of removal of goods)
who is competent to adjudicate the cases. The chief criterion to determine
jurisdiction in Central Excise cases is thus the place where the offence is
committed.
(ii) In respect of Customs cases however, the principle to be applied in

respect of seizure and adjudication is not the same as stated in the
preceding sub-paragraph. Section 110 of the Customs Act gives power to the
proper officer to seize any goods liable to confiscation under the Act. There
is no reference in this section to the place at which such seizure can be
effected at any place and the case adjudicated by the competent officer
under whose jurisdiction the goods were seized.
55A. Offences of licencees: - Where a licencee has been convicted by a

Court or penalized by an officer of Central Excise for serious offence, action
should be taken simultaneously for cancellation, revocation or suspension of
the licence under rule 181, Technically a licence can be suspended or
revoked by the licencing authority but no officer subordinate to the Collector
should actually exercise the power in respect of any licence without the prior
approval of the Collector.
55B. Enforcement of orders of Adjudication: -
(a) When an offence, or any Central Excise matter involving duty, is

adjudicated, the order passed may take one or more of the following three
forms.
(i) A personal penalty may be imposed.


(ii) Excisable goods may be confiscated and a fine in lieu of confiscation may
be imposed.
(iii) Excise duty and additional excise duty may be ordered to be paid.
(b) Enforcement of payment of Personal Penalty:
(i) Where a personal penalty has been imposed the order passed by the
adjudicating authority should not specify the period within which the penalty
should be paid.
(ii) Steps to effect the recovery of a personal penalty, by any of the means
provided in section 11 of the Central Excises and Salt Act, 1944, should not
be taken in any case, until the period for preferring an appeal has expired.
(iii) A distinction should be made between personal penalties imposed on (a)

“owners of goods” in respect of which the offence was committed (whether
such goods are under detention or not) and (b) others.
(iv) In the case of (a) if the owner has preferred an appeal, and the
appellate authority has fixed a time within which the penalty should be
deposited before the appeal can be considered, payment of the penalty
should be enforced by application of section 11, after the expiry of such
period.
(v) In all other cases, where an appeal has been preferred, steps to enforce
payment by application of section 11 should not be taken, before orders on
the appeal have been passed.
(vi) There is no legal objection at any time, and in any case, to the detention
of goods under Sec. 142(1)(b) of the Customs Act, 1962 as made applicable
by notification issued under Section 12 of the Central Excises and Salt Act,
1944 until the penalty is paid. It should be noted in this connection that:-
(1) Section 142(1)(b) of the Customs Act, 1962 permits not only the
detention of goods in respect of which the penalty has been imposed, but
also of other goods belonging to the person penalized which are under excise
control;
(2) This section permits not only detention but also disposal of goods by
sale;


(3) The detention of goods may take the form of stopping all clearances of
the owner's goods from licensed or approved premises, i.e., a factory, a
warehouse, bonded store room etc.
(c) Fines in lieu of confiscation - Date of disposal of confiscated goods:-
(i) Wherever confiscation is ordered under the Central Excises and Salt Act,
1944, or the Rules made thereunder the adjudicating officer is required,
under Sec.34 of the Act, to give the owner of the goods an option to pay in
lieu of confiscation such fine as the officer thinks fit. The period with which
this option can be exercised by the owner of the goods has not been laid
down in the Act or the Rules. Under Rule 211, confiscated goods vest in the
Central Government, and there is no legal bar to their being disposed of, at
any time, after the order of confiscation is passed, but the order of
confiscation and the consequent vesting of the property in Government are
subject to two qualifications, namely:-
(1) The order of confiscation is liable to be set aside or annulled on appeal or

revision, in which event, that order would be deemed in eye of the law to
have never been made, and the goods which it should be held likewise never
to have vested in Government.
(2) The mandatory provision of giving the owner of the confiscated goods an
option to pay fine in lieu of confiscation shall be real and not merely formal
that is to say, the option should truly enable the owner of the goods to
redeem them on payment of fine specified.
Having regard to these qualifications, it is necessary to give the owner of the

goods sufficient and reasonable time to redeem the goods on payment of the
fine in lieu of confiscation. This time-limit should ordinarily be three months,
and should be specified in the order of adjudication itself. But in the case of
perishable goods, or of goods which are likely to depreciate quickly in value
under normal storage conditions, the time-limit should be fixed in each case
on its merits, and should also be specified in the adjudication order.
(ii) If the owner fails to redeem the goods within the time-limit so fixed, the
adjudicating officer should proceed to dispose of the goods according to the
provisions of paragraph 8-B after giving a fresh notice to the owner of the
goods, specifying the date fixed for sale. If the owner requests an extension
of time, it may be granted on the explicit understanding that Government
accepts no responsibility for any risks to which the goods may be exposed,


and that the owner will, be required to pay such storage and other charges
as may be incurred in respect of the goods.
(iii) In order that, in any appeal or revision application which the owner may
have filed and which has not already been decided prior to the disposal of
the goods, an order may not be made by the appellate or revisional
authority in terms setting aside the order of confiscation, adjudicating officer
must promptly inform the appellate authority that the goods have been sold
already, so that an appropriate order can be made by such authority, having
regard to the facts of the case. Such order, for instance, may require that
net sale proceeds of the goods may be paid to the owner.
Enforcement of Payment of Excise Duty:
(i) The principles contained in sub-paragraphs (b) (i) to (v) above should
also be followed in regulating recovery of excise duty ordered to be paid.
(ii) Excisable goods whether duty paid or not, belonging to the person who
has been ordered to pay the duty may be detained under Rule 230 of the
Central Excise Rules, 1944. The principles contained in sub-paragraph (b)
(vi) above are all applicable to such cases of detention.
(iii) Where the goods in respect of which the duty has been ordered to be
paid are under excise control, they should be detained pending payment. It
would not ordinarily be necessary to detain other goods.

Manual of Departmental Instructions On Adjudication Adjudication

Uploaded by

Document Informationclick to expand document information

Copyright:

Available Formats

Manual of Departmental Instructions On Adjudication Adjudication

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Manual of Departmental Instructions On Adjudication Adjudication

Uploaded by

Copyright:

Available Formats

Adjudication

MANUAL OF DEPARTMENTAL INSTRUCTIONS ON ADJUDICATION

27. General Importance of Adjudication: - Adjudication of offence under

28. Framing of charges: - The following principles should be observed by

(i) A clear distinction should be drawn between a transaction and an act; a

(iii) (a) If in the course of a single investigation, a number of separate and

(iv) Where an adjudicating officer considers that a penalty exceeding the

29. Each consignment for purpose of adjudication of stock taking

30. Need for separate adjudication order in cases involving more

In cases where transactions cannot be separated which would be very few,

31. Adjudication of offences to which different rules are applicable: -

(Board's F.No, 18/18/65-CXIV dt. 29.4.65)

32. Determination of MENS REA in departmental adjudications: - The

32A. Adjudications by the detecting officers: - If the adjudicating

32B. Confiscation of goods: - (1) The expression “shall be liable to

33. Time Schedule for expeditious adjudication of offences and

(i) All reports of arrest, search or seizure should be submitted to the

(v) The confiscated goods should be permitted to be redeemed in

(b) Supervisory Officers like Assistant Collectors, Deputy Collectors and

(c) The procedure contained in this paragraph should also be followed

34. Form of adjudication order in Central Excise cases: - (i) All

(ii) if such amount or value exceeds fifty rupees ____________

(ii) An original order of adjudication should be self contained and

(v) A direct penalty may be adjudged in addition to the confiscation of the

38. Demand for Central Excise duty on confiscated goods not to be

36A. Distinction between confiscation under the Central Excise

37. Whether warnings are punishments under Section 33 of the

38. Quoting of Rules and the method of calculation of differential

39. Quoting of number and date of Board's orders in correspondence

Where a reference has been made by the Board/Department of Revenue to

40. Observance of the Principles of natural Justice in Departmental

(2) Extracts taken from the order passed by Shri B.K.Agarwal,

17.2 I have given careful consideration to the above admissions. There

“There is a good deal of misconception on the question of right of cross

(3) Grant of personal hearing before a refund claim is

40A. Recommendations by the office Assistants or other

40B. Passing of conditional orders in adjudication and appeals: - In

41. Determination of competent adjudicating authority in cases

42. Whether on transfer of the officer who recorded decision on the

"……………….. that the goods are liable to be confiscated but as the

44. Power of adjudication of Central Excise Officers: - The officers

S. No. Officers Powers Authority

Powers indicated in C.B.R. Notification No.

Assistant Collector of C.B.R. Notification No.8-

Supdts. of Central C.B.R. Notification

45. Restrictions in the power of adjudication of Central Excise

(A) Where there is alleged or potential evasion of duty the powers of

S. No. Rank of officers Amount of duty involved

Power indicated in clause (a)

2. Additional Collector Rs.2 lakhs.

3. Deputy Collector Rs. One lakh.

4. Asstt. Collector Rs. 25,000/-

(C) Where the case to be adjudicated relate to:-

(b) a rebate of duty of excise on goods exported to any country or

(c) goods exported outside India (except to Nepal or Bhutan)

Rank of Officer Amount of duty involved

Dy. Collector Without limit

Assistant Collector Upto Rs.20,000/-