5 GENERAL PROCEDURES UNDER CENTRAL EXCISE SIGNIFICANT NOTIFICATIONS/CIRCULARS ISSUED BETWEEN 01.05.2014 AND 30.04.2015 1. Following amendments have been made in Central Excise Rules, 2002 [CER] vide Notification No. 8/2015 CE (NT) dated 01.03.2015: (i) Non/ short-payment of duty reflected in the periodic returns and penalty payable under rule 8(3A) to be recovered under section 11 [Rule 8(4)] Rule 8 of the CER contains the provisions pertaining to manner of payment of excise duty. Sub-rule (4) of rule 8 laid down that the duty as assessed under rule 6 and the interest under sub-rule (3) of rule 8 would be recovered in accordance with the provisions of section 11 in the same manner as they are applicable for recovery of any duty or other sums payable to the Central Government. The said sub-rule has been amended to provide that duty as assessed under rule 6 and mentioned in the return filed under these rules, the interest under sub-rule (3) and penalty under sub-rule (3A) will be recovered in accordance with the provisions of section 11. It may be noted that section 11A has been amended to provide that provisions of section 11A will not apply to cases where the non-payment or short payment of duty is reflected in the periodic returns and that in such cases recovery of duty shall be made in such manner as may be prescribed in the rules. Thus, the above amendment has been made in rule 8(4) to provide that in such cases recovery will be made under section 11. (ii) Provisions introduced for preservation of records in electronic form with authentication by digital signatures [New sub-rules (4) & (5) of rule 10] Rule 10 has been amended by inserting a new sub-rule (4) which provides that records under rule 10 may be preserved in electronic form and every page of the record so preserved shall be authenticated by means of a digital signature. The Board may notify the conditions, safeguards and procedure to be followed by an assessee preserving digitally signed records [Sub-rule (5)]. 210
(iii) Invoice to contain details of job worker and the manufacturer/output service provider when goods are directly dispatched to job worker without first bringing them to the premises of the manufacturer/ output service provider [Second proviso to rule 11(2)] Rule 11 contains the provisions relating to issuance of invoices. A second proviso has been inserted in rule 11(2) to lay down that if goods are directly sent to a job worker on the direction of a manufacturer or the provider of output service, the invoice will also contain the details of the manufacturer or the provider of output service, as the case may be, as buyer and contain the details of job worker as the consignee. The above amendment has been made pursuant to the amendment made in rule 4 of CCR allowing CENVAT credit on receipt of inputs and capital goods in the premises of job worker without first bringing them to the premises of the manufacturer/output service provider. (iv) Invoice to contain details of registered dealer and its customers when goods are directly dispatched to such customers without first bringing them to the premises of the registered dealer [Third proviso to rule 11(2)] A third proviso has been inserted in rule 11(2) to lay down that if goods are directly sent to any person on the direction of the registered dealer, the invoice will also contain the details of the registered dealer as the buyer and the person as the consignee, and that person will take CENVAT credit on the basis of the registered dealer s invoice. Further, if the goods imported under the cover of a bill of entry are sent directly to buyer s premises, the invoice issued by the importer should mention that goods are sent directly from the place or port of import to the buyer s premises [Fourth proviso]. (v) Provisions relating to issuance of an invoice under rule 11 to apply to an importer issuing CENVATable invoices [Rule 11(7)] Earlier, sub-rule (7) provided that the provisions of rule 11 apply mutatis mutandis to goods supplied by a first stage dealer or a second stage dealer. The said sub-rule has been amended to also apply the provisions of rule 11 mutatis mutandis to goods supplied by an importer who issues an invoice on which CENVAT credit can be taken. 211
(vi) Provisions introduced for authentication of invoices by digital signatures [New sub-rules (8) and (9) of rule 11] Authentication of invoices by means of digital signatures has been provided by inserting new sub-rule (8) in rule 11. New sub-rule (8) provides that an invoice issued under this rule by a manufacturer may be authenticated by means of a digital signature. However, where the duplicate copy of the invoice meant for transporter is digitally signed, a hard copy of the duplicate copy of the invoice meant for transporter and self attested by the manufacturer would be used for transport of goods. Under sub-rule (9), the Board may notify the conditions, safeguards and procedure to be followed by an assessee issuing digitally signed invoices. It has been clarified that for the purposes of rule 10 and this rule, the expressions, authenticate, digital signature and electronic form shall have the respective meanings as assigned to them in the Information Technology Act, 2000. (vii) Belated filing of returns/ Annual Financial Information Statement/ Annual Installed Capacity Statement to attract late fee [New sub-rule (6) of rule 12 & new sub-rule (6) of rule 17] Rule 12 prescribes the provisions relating to filing of various central excise returns. A new sub-rule (6) has been inserted in rule 12 to lay down that where any return [ER-1, ER-3, ER-8] or Annual Financial Information Statement [ER-4] or Annual Installed Capacity Statement [ER-7] is submitted by the assessee after the relevant due date, the assessee will be required to pay an amount calculated at the rate of ` 100 per day subject to a maximum of ` 20,000 for the period of delay in submission of each such return or statement. Similarly new sub-rule (6) has been inserted in rule 17. Rule 17 governs the provisions in relation to removal of goods from 100% EOU to Domestic Tariff Area. Sub-rule (3) of rule 17 requires the 100% EOU unit to electronically submit a monthly return in form ER 2 within 10 days from the close of the month to which the return relates, in respect of excisable goods manufactured in, and receipt of inputs and capital goods in, the unit. Delay in filing of such return will now attract a late fee of ` 100 per day for each day of default subject to a maximum of ` 20,000 in terms of newly inserted sub-rule (6). 212
(viii) Restrictions can also be imposed on a registered importer for evasion of excise duty under rule 12CCC [Rule 12CCC] Earlier, under rule 12CCC, Central Government could impose restrictions on a manufacturer, first stage and second stage dealer or an exporter, if there was evasion of excise duty. Such restrictions can now be imposed in case of a registered importer also. Further, in the event of evasion of excise duty, registration of an importer can also be suspended like that of a dealer. Consequential amendments have also been made in Notification No. 16/2014 CE (NT) dated 21.03.2014 vide Notification No. 10/2015 CE (NT) dated 01.03.2015 so as to apply the provisions of the said notification to registered importer also. Notification No. 16/2014 CE (NT) dated 21.03.2014 has been issued under 12CCC of Central Excise Rules, 2002 and rule 12AAA of CENVAT Credit Rules, 2004 to specify the nature of restrictions, types of facilities to be withdrawn and procedure for issue of such order in the event of evasion of excise duty or misuse of CENVAT credit. (ix) Export under rule 18 to mean taking goods out of India to a place outside India [Explanation to rule 18] Rule 18 governs the provisions relating to export of goods under a claim of rebate. The Explanation to the said rule has been amended to provide that export means goods to be taken outside India or supplied as stores to foreign going vessels/aircraft. The amended explanation reads as under: Explanation. For the purposes of this rule, export, with its grammatical variations and cognate expressions, means taking goods out of India to a place outside India and includes shipment of goods as provision or stores for use on board a ship proceeding to a foreign port or supplied to a foreign going aircraft. Thus, rebate of excise duty will not be available on supply of goods to 100% EOU. As regards supply of goods to SEZ, it has been clarified vide CBEC Circular No.1001/8/2015-CX.8 dated 28.04.2015 that since SEZ is deemed to be outside the Customs territory of India, any licit clearances of goods to an SEZ from the DTA will continue to be export. Therefore, such clearances will be entitled to the benefit of rebate under rule 18 and of refund of accumulated CENVAT credit under rule 5 of CCR, 2004, as the case may be. 213
(x) Registered importer to submit list of records and furnish required documents when called for under sub-rules (2) and (3) of rule 22 [Sub-rules (2) and (3) of rule 22] Earlier, provisions of sub-rules (2) and (3) of rule 22 relating to submission of list of records and furnishing of the required documents on demand to the relevant authority for scrutiny were applicable to every assessee and first and second stage dealer. The said sub-rules have been amended so as to apply these provisions to a registered importer issuing CENVATable invoices as well. (xi) (a) Registered importer liable to penal provisions under rule 25 [Rule 25] Prior to 01.03.2015, the provisions of rule 25 relating to confiscation and penalty were applicable to a producer, manufacturer, registered person of a warehouse and a registered dealer. However, with effect from, 01.03.2015, the scope of applicability of rule 25 has now been extended to an importer who issues an invoice on which CENVAT credit can be taken. (b) Minimum General penalty under rule 25 increased from ` 2,000 to `5,000 [Rule 25] Further, with effect from 14.05.2015, the minimum general penalty prescribed under rule 25 has been increased from ` 2,000 to ` 5,000. [Effective from 14.05.2015] 2. Central excise registration to be granted online within 2 working days - verification of documents and premises to be carried out after the grant of the registration [Notification No. 35/2001 CE (NT) dated 26.06.2001] Notification No. 35/2001 CE (NT) dated 26.06.2001 specifies the conditions, safeguards and procedures for registration of a person. Notification No. 7/2015 CE (NT) dated 01.03.2015 has amended Notification No. 35/2001 CE (NT) to ensure that only an online application is made for registration and the same is granted within two working days of the receipt of a duly completed application form. Verification of documents and premises, as the case may be, can be carried out after the grant of the registration. The amended notification provides as under: (i) Application for registration: Every person specified under rule 9(1) of CER, unless exempted from doing so by the Board under rule 9(2), shall get himself registered with the jurisdictional Deputy or Assistant Commissioner of Central Excise by applying in the form provided for registration in the website www.aces.gov.in 214
(ii) Registration of different premises of the same registered person: If the person has more than one premises requiring registration, separate registration certificate shall be obtained for each of such premises. However, if a person manufactures or carries on trade in goods falling under Chapter 50 to 63 (textile articles) of First Schedule to the Central Excise Tariff Act, 1985 and has more than one premises requiring registration, he may obtain a single registration for all such premises, which fall within the jurisdiction of one Commissioner of Central Excise provided he declares the details of all such premises in the specified form. Also, if a person manufactures Compressed Natural Gas (Tariff item 2711 of Central Excise Tariff) and has more than one premises requiring registration, which fall within the jurisdiction of one Chief Commissioner of Central Excise, he may obtain a single registration for all such premises with any of the Commissioner of Central Excise falling within the jurisdiction of the said Chief Commissioner. He will have to submit the details of all such premises along with the application for registration, subject to the condition that prior intimation shall be given before starting any additional premises subsequent to obtaining such registration (iii) Online filing of application: Application for registration or de-registration or amendment of the registration application shall be filed only online on the website www.aces.gov.in, in the forms provided in the website. (iv) PAN based Registration: Applicant for registration shall mandatorily quote Permanent Account Number (PAN) of the proprietor or the legal entity being registered in the specified column in the application form, failing which registration will not be granted. Government Departments are exempt from the requirement of quoting the PAN in their online application. (v) (a) Applicant to quote e-mail address and mobile number: Applicant shall quote his e-mail address and mobile number in the requisite column of the application form for communication with the Department. (b) Business Transaction Numbers: Business transaction numbers obtained from other Government departments or agencies such as Customs Registration No (BIN No), Import Export Code (IEC) Number, State Sales Tax /(VAT) Number, Central Sales Tax Number, Company Index Number (CIN), Service Tax Registration Number, which have been issued prior to the filing of Central Excise Registration application, shall be filled in the form and for the numbers subsequently obtained, the application shall be amended. (vi) Registration Number and Certificate: Pending post-facto verification of premises and documents by the authorized Officers, registration application shall be approved by the Deputy or Assistant Commissioner within 2 days of the receipt of duly completed online application form. A Registration Certificate containing registration 215
number shall be issued online and a printed copy of such Registration Certificate shall be adequate proof of registration and the signature of the issuing authority is not required on the said Registration Certificate. (vii) Submission of documents: The applicant shall tender self attested copies of the following documents at the time of verification of the premises: (a) Plan of the factory premises; (b) Copy of the PAN Card of the proprietor or the legal entity registered; (c) Photograph and Proof of the identity of the applicant; (d) Documents to establish possession of the premises to be registered; (e) Bank account details; (f) Memorandum or Articles of Association and List of Directors; and (g) Authorization by the Board of Directors or Partners or Proprietor for filing the application by a third party. (viii) Physical verification: (a) The authorized officer shall verify the premises physically within 7 days from the date of receipt of application through online. Where errors are noticed during the verification process or any clarification is required, the authorized Officer shall immediately intimate the same to the assessee for rectification of the error within 15 days of the receipt of intimation failing which the registration shall stand cancelled. The assessee shall be given a reasonable opportunity to represent his case against the proposed cancellation, and if it is found that the reasons given by the assessee are reasonable, the authorized Officer shall not cancel the registration to the premises. (b) On the physical verification of the premises, if it is found to be non-existent, the registration shall stand cancelled. The assessee shall be given a reason opportunity to represent his case against the proposed cancellation, and if it is found that the reasons given by the assessee are reasonable, the authorized Officer shall not cancel the registration to the premises recording the complete and correct address. (ix) Transfer of Business or acquisition of factory: Where a registered person transfers his business to another person, the transferee shall get himself registered afresh. Where an applicant has acquired an old factory from a Bank or a Financial Institution, he shall get himself registered afresh. (x) Change in the Constitution: Where a registered person is a firm or a company or association of persons, then in the event of any change in the constitution of the firm leading to change in PAN, he shall get himself registered afresh. In other cases of change in constitution of business, where there is no change in PAN, the same 216
shall be intimated to the jurisdictional Central Excise Officer within 30 days of such change by way of amendment to the registration details to be carried out online and this will not result in any change in the registration number. (xi) De-registration: Every registered person, who ceases to carry on the business for which he is registered, shall de-register himself by making an online application. Where there are no dues pending recovery from the assessee, application for deregistration shall be approved within 30 days from the date of filing of online declaration and the assessee shall be informed, accordingly. (xii) Cancellation of registration: A registration certificate granted under rule 9 may be cancelled after giving a reasonable opportunity to the assessee to represent his case against the proposed cancellation by the Deputy or Assistant Commissioner of Central Excise, in any of the following situations, namely: (a) where on verification, the premises proposed to be registered is found to be non-existent; (b) where the assessee does not respond to request for rectification of error noticed during the verification of the premises within 15 days of intimation; (c) where there is substantial mis-declaration in the application form; and (d) where the factory has closed and there are no dues pending against the assessee 3. Manufacturer receiving excisable goods for specified use at concessional rate of duty allowed to furnish letter of undertaking, instead of executing a bond, on fulfilment of specified conditions [Rule 3(3) of Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001] Rule 3 of Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001 required a manufacturer who intended to receive excisable goods for specified use at concessional rate of duty to make an application in quadruplicate and execute a general bond with surety or security. With effect from 01.03.2015, rule 3 has been amended vide Notification No. 9/2015 CE (NT) dated 01.03.2015 to provide that it would be sufficient if the manufacturer furnishes a letter of undertaking. However, such a relaxation would be available only to that manufacturer against whom no show cause notice has been issued under section 11A(4) or 11A(5) of Central Excise Act, 1944 or no action is proposed under any notification issued in pursuance of rule 12CCC of Central Excise Rules, 2002 or rule 12AAA of CENVAT Credit Rules, 2004. 217