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26 Oct 2015

Monetary limit for exercise of powers to arrest in Central Excise and Service Tax"

Recently, CBEC vide Circular No. 1009/16/2015-CX dated 23.10.2015 and 1010/17/2015-CX dated 23.10.2015, has directed its officers not to exercise their powers for launching prosecution unless evasion of Central Excise duty or Service Tax, or misuse of CENVAT Credit in relation to offences specified under sub-section (1) of Section 9 of the Central Excise Act, 1944 or sub-section (1) of section 89 of the Finance Act, 1994 is equal to or more than Rs. One Crore.

Further, monetary limit of one crore shall not be applicable in respect of habitual evaders. Here, habitual evaders means a company/assessee who is evading tax/duty or misusing CENVAT Credit facility, if it has been involved in three or more cases of confirmed demand (at the first appellate level or above) of Central Excise duty or Service Tax or misuse of CENVAT Credit involving fraud, suppression of facts etc. in past five years from the date of the decision such that the total duty or tax evaded or total credit misused is equal to or more than Rs. One Crore.

Here, it is pertinent to mention that though there is no change in monetary limit (Rs. 50 lakh) mentioned under sub-section (1) of Section 9 of the Central Excise Act, 1944 and sub-section (1) of section 89 of the Finance Act, 1994, these directions are issued to optimally utilize limited resources.