CHAPTER 13

DEMAND NOTICE/SHOW CAUSE NOTICE, ADJUDICATION, INTEREST, PENALTY,

CONFISCATION, SEIZURE, DUTY PAYMENT UNDER PROTEST

PART I

DEMAND NOTICE/SHOW CAUSE NOTICE
1. Introduction

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

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

2. Issue of duty demand notice

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

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

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

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

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