57I. Recovery of credit wrongly availed of or utilised in an
irregular manner.- (1) (i) Where credit of duty paid on inputs
has been taken on account of an error, omission or mis-
construction, on the part of an officer or a manufacturer, or an
assessee, the proper officer may, within six months from the date
of filing the return as required to be submitted in terms of sub-
rule (8) of rule 57G, and where no such return as aforesaid is
filed, within six months from the last date on which such return
is to be filed under the said rule, serve notice on the
manufacturer or the assessee who has taken such credit requiring
him to show cause why he should not be disallowed such credit and
where the credit has already been utilised, why the amount
equivalent to such credit should not be recovered from him.
(ii) Where a manufacturer has taken the credit by reason of
fraud, wilful mis-statement, collusion, or suppression of facts,
or contravention of any of the provisions of the Act or the rules
made thereunder with intent to evade payment of duty, the
provisions of clause (i) shall have effect as if for the words
`six months', the words `five years' were substituted.
(iii) The proper officer, after considering the representation,
if any, made by the manufacturer or the assessee on whom notice
is served under clause (i), shall determine the amount of such
credit to be disallowed (not being in excess of the amount
specified in the show cause notice) and thereupon such
manufacturer or assessee shall pay the amount equivalent to the
credit disallowed, if the credit has been utilised, or shall not
utilise the credit thus disallowed.
Explanation.- Where the service of the notice is stayed by an
order of a court of law, the period of such stay shall be
excluded from computing the aforesaid period of six months or
five years, as the case may be.
(2) If any inputs in respect of which credit has been taken are
not fully accounted for as having been disposed off in the manner
specified in this section, the manufacturer shall, upon a written
demand being made by the Assistant Commissioner of Central
Excise, pay the duty leviable on such inputs within three months
from the date of receipt of the notice of demand.
(3) Where a manufacturer or an assessee fails to pay the amount
determined under sub-rule (1) or sub-rule (2) within three months
from the date of receipt of demand notice, he shall pay, in
addition to the amount so determined, interest at such rate, as
may be fixed, by the Central Board of Excise and Customs under
section 11AA of the Act, from the date immediately after the
expiry of the said period of three months till the date of
payment.
(4) Where the credit of duty paid on inputs has been taken
wrongly by reason of fraud, wilful mis-statement, collusion or
suppression of facts, or contravention of any of the provisions
of the Act or the rules made thereunder with intent to evade
payment of duty, the person who is liable to pay the amount
equivalent to the credit disallowed as determined under clause
(iii) of sub-rule (1) shall also be liable to pay a penalty equal
to the credit so disallowed.
Explanation I. - Where the credit disallowed is reduced by the
Commissioner of Central Excise (Appeals), the Appellate Tribunal
or, as the case may be, a court of law, the penalty shall be
payable on such reduced amount of credit disallowed.
Explanation II.- Where the credit disallowed is increased or
further increased by the Commissioner of Central Excise
(Appeals), the Appellate Tribunal or, as the case may be, a court
of law, the penalty shall be payable on such increased or further
increased, amount of credit disallowed.
(5) Notwithstanding anything contained in clause (iii) of sub-
rule (1) or sub-rule (4), where the credit of duty paid on inputs
has been taken wrongly on account of fraud, wilful mis-statement,
collusion, or suppression of facts, or contravention of any of
the provisions of the Act or the rules made thereunder with
intent to evade payment of duty, the person who is liable to pay
the amount equivalent to the credit disallowed, as determined
under sub-rule (2), shall also be liable to pay interest at such
rate as may be fixed by the Board under section 11AA of the Act
from the first day of the month succeeding the month in which the
credit was wrongly taken, till the date of payment of such
amount.
Explanation I. - For the removal of doubts, it is hereby declared
that the provisions of this sub-rule shall not apply to cases
where the credit disallowed became payable before the 23rd day of
July, 1996.
Explanation II.- Where the credit disallowed is reduced by the
commissioner of central Excise (Appeals), the Appellate Tribunal
or, as the case may be, a court of law, the interest shall be
payable on such reduced amount of credit disallowed.
Explanation III.- Where the credit disallowed is increased, or
further increased, by the Commissioner of Central Excise
(Appeals), the Appellate Tribunal or, as the case may be, a court
of law, the interest shall be payable on such increased, or
further increased, amount of credit disallowed.
57J. Credit of duty in respect of inputs used in an intermediate
product. - (1) Notwithstanding anything contained in these rules,
the manufacturer shall be allowed to take credit of the specified
duty paid on inputs described in column (2) of the Table below
and used in the manufacture of intermediate products described in
column (3) of the said Table received by the said manufacturer
for use in or in relation to the manufacture of final products
described in the corresponding entry in column (4) of the said
Table:
TABLE
S.No. Description of Description of Description of
inputs intermediate products final products
(1) (2) (3) (4)
1 All goods All goods falling All goods
falling within within the Schedule falling within
the Schedule to to the Central Excise the Schedule to
the Central Tariff Act, 1985 (5 the Central
Excise Tariff of 1986), other than Excise Tariff
Act, 1985 (5 of the following namely:-Act, 1985 (5 of
1986),other 1986), other
than the than the
following following,
namely:- namely:-
(i) goods (i) goods (i) goods
classifiable classifiable under classifiable
under any any heading of under any
heading of Chapter 24 of the heading of
Chapter 24 of Schedule to the said Chapter 24 of
the Schedule to Act; the Schedule to
the said Act; the said Act;
(ii) goods (ii) goods (ii) goods
classifiable classifiable under classifiable
under heading heading Nos.36.05 or under heading
Nos. 36.05 or 37.06 of the Schedule Nos.36.05 or
37.06 of the to the said Act; 37.06 of the
Schedule to the Schedule to the
said Act; (iii) goods said Act;
(iii) goods classifiable under (iii) fabrics
classifiable sub-heading Nos. of cotton or
under sub- 2710.11, 2710.12, man-made fibres
heading Nos. 2710.13 or 2710.19 falling within
2710.11, (except Natural Chapter 52,
2710.12, gasoline liquid) of Chapter 54 or
2710.13 or the Schedule to the Chapter 55 of
2710.19 (except said Act; the Schedule to
Natural the said Act;
gasoline
liquid) of the (iv) high speed (iv) fabrics of
Schedule to the diesel oil cotton or man-
said Act; classifiable under made fibres
(iv) high speed heading No.27.10 of falling within
diesel oil the Schedule to the heading
classifiable said Act. Nos.58.01,
under heading 58.02, 58.06
No.27.10 of the (other than
Schedule to the goods falling
said Act. within sub-
heading
No.5806.20),
60.01 or 60.02
(other than
goods falling
within sub-
heading
No.6002.10) of
the Schedule to
the Act.
(2) The manufacturer of final products shall take credit under
sub-rule (1) only if the intermediate products are manufactured
in a factory as a job work in respect of which the exemption
contained in the notification of the Government of India in the
Ministry of Finance (Department of Revenue) No. 214/86-Central
Excises, dated the 25th March,1986, has been availed of.
(3) The credit under sub-rule (1) shall be allowed only if the
intermediate products received by the manufacturer of the said
final products are accompanied by any of the documents as
specified under rule 57G evidencing the payment of duty on such
inputs.";
(b) for section AAAA, the following section shall be
substituted, namely:-
"AAAA. CREDIT OF DUTY PAID ON CAPITAL GOODS USED BY THE
MANUFACTURER OF SPECIFIED GOODS
57Q. Applicability. - (1) The provisions of this section shall
apply to goods (hereafter in this section, referred to as the
"final products") described in column (3) of the Table given
below and to the goods (hereafter, in this section, referred to
as "capital goods"), described in the corresponding entry in
column (2) of the said Table, used in the factory of the
manufacturer of final products.
TABLE
-----------------------------------------------------------------
S.No. Description of capital goods Description of
falling within the Schedule to the final products
Central Excise Tariff Act, 1985 (5
of 1986) and used in the factory
of the manufacturer
(1) (2) (3)
-----------------------------------------------------------------
1. All goods falling under heading All goods specified
Nos. 82.02 to 82.11; in the Schedule to
the Central Excise
Tariff Act, 1985 (5
of 1986), other
than the following,
namely:-
2. All goods falling under chapter 84 (i) all goods
(other than internal combustion falling under
engines falling under heading No. Chapter 24; and
84.07 or 84.08 and of a kind used (ii) all goods
in motor vehicles, compressors falling under
falling under heading No. 84.14 heading Nos. 36.05
and of a kind used in or 37.06.
refrigerating and airconditioning
appliances and machinery, heading
or sub-heading Nos. 84.15, 85.18,
3. 8422.10, 84.24, 84.29 to 84.37,
84.40, 84.50, 84.52, 84.69 to
84.73, 84.76, 84.78, expansion
4. valves and solenoid valves falling
under sub-heading No. 8481.10 of a
kind used for refrigerating and
airconditioning appliances and
machinery);
All goods falling under chapter 85
(other than those falling under
heading Nos. 85.09 to 85.13, 85.16
to 85.31, 85.39 and 85.40);
All goods falling under heading
No. 90.11 to 90.13, 90.16, 90.17,
90.22 (other than for medical
use), 90.24
to 90.31 and 90.32 (other than of
a kind used for refrigeration and
5. airconditioning appliances and
machinery);
6. Components, spares and accessories
7. of the goods specified against
8. S.Nos. 1 to 4 above;
9. Moulds and dies;
10. Refractories and refractory
materials;
11. Tubes and pipes and fittings
12. thereof, used in the factory;
Pollution control equipment;
Grinding wheels and the like goods
falling under sub-heading No.
6801.10;
Goods falling under heading No.
68.02; and
Lubricating oils, greases, cutting
oils and coolants.
(2)(i) The manufacturer of the final products shall be allowed
credit of the duty of excise or the additional duty leviable
under section 3 of the Customs Tariff Act, 1975 (5 of 1975)
(hereinafter referred to as "specified duty") paid on the capital
goods.
(ii) The manufacturer availing of the credit may utilise the same
for payment of duty of excise payable on the final products
manufactured in his factory.
(3) Notwithstanding anything contained in sub-rule (1),the
manufacturer of the final products shall be allowed credit of
additional duty leviable under section 3 of the Customs Tariff
Act, 1975 (5 of 1975) on goods falling under Chapter heading
No.98.01 of the first schedule to the said Customs Tariff Act, to
the extent of 75% of the said additional duty paid on such
goods.
(4) A manufacturer of the final products purchasing capital
goods from a unit situated in a Free Trade Zone or from a
hundred per cent. export-oriented undertaking or from a unit in
an Electronic Hardware Technology Park or Software Technology
Parks and using them in the manufacture of final products, shall
be allowed to take the credit of the specified duty paid on such
capital goods only to the extent of duty which is equal to the
additional duty leviable on like goods under section 3 of the
Customs Tariff Act, 1975 (5 of 1975), equivalent to the duty of
excise paid on such capital goods.
(5) The credit of the specified duty on capital goods (other than
those capital goods in respect of which credit of duty was
allowable under any other rule or notification prior to the 1st
day of March, 1997) shall not be allowed if such capital goods
were received in the factory before the 1st day of March, 1997.
(6) A manufacturer shall be allowed credit of specified duty paid
on capital goods manufactured by him for the manufacture of final
products in his factory.
(7) The credit of the specified duty on capital goods [other
than those capital goods covered under S.No. 5, 7, 10, 11 and 12
of column (2) of the Table below sub-rule (1)] and received in
the factory on or after the 1st day of January, 1996, shall not
be taken on a date prior to the date on which such capital goods
are installed or, as the case may be, used for manufacture of
excisable goods, in the factory of the manufacturer as certified
by such manufacturer or a person designated by him for this
purpose.
(8) Notwithstanding anything contained in sub-rule (7), a
manufacturer intending to remove the capital goods from his
factory for home consumption or for export, prior to their being
installed or used, as the case may be, shall be allowed to take
credit on the date on which such capital goods are so removed by
him from his factory on payment of the appropriate duty of excise
leviable thereon as provided in rule 57S.
57 R. Credit of duty not to be allowed or denied or varied in
certain circumstances and adjustment in duty credit. -
(1) No credit of the specified duty shall be allowed on capital
goods which are used in the manufacture of final products (other
than final products which are exempt from the whole of the duty
of excise leviable thereon under any notification where exemption
is granted based upon the value or quantity of clearances made in
a financial year) on which no amount of excise duty is payable
for any reason except when the final product is either,
(i) cleared to a unit in a Free Trade Zone; or
(ii) cleared to a hundred per cent. export-oriented
undertaking; or
(iii) cleared to a unit in an Electronic
Hardware Technology Park or Software Technology Parks;
(2) Credit of the specified duty allowed in respect of any
capital goods shall not be denied or varied on the ground that
any intermediate products have come into existence during the
course of manufacture of the final product and that such
intermediate products are, for the time being, exempt from the
whole of the duty of excise leviable thereon or chargeable to
nil rate of duty:
Provided that such intermediate products are specified as final
products in column (3) of the Table below sub-rule (1) of rule
57Q.
(3) The credit of the specified duty paid on the capital goods
shall be allowed to a manufacturer if the capital goods are
acquired by the manufacturer on lease, higher purchase or loan
agreement, from a financing company subject to the following
procedure, namely:-
(i) The manufacturer shall file a declaration before the
Assistant Commissioner of Central Excise as required under rule
57T;
(ii) The manufacturer availing credit of the specified duty
paid on capital goods, who has entered into a financial
arrangement,-
(a) for financing the cost of such capital goods excluding
the specified duty, shall produce a copy of the invoice referred
to in rule 57T, evidencing payment of specified duty along with a
copy of the agreement entered into by him with the said
financing company; or
(b) for financing the cost of such capital goods including
the specified duty, shall produce a certificate from the
financing company to the effect that the duty specified on such
capital goods has been paid by the said manufacturer to such
financing company, prior to payment of first lease rental
instalment or first hire-purchase instalment or first instalment
of re-payment of loan, as the case may be, along with a copy of
the agreement entered into with the said financing company.
(iii) The manufacturer and the financing company shall not claim
depreciation under the Income-tax laws on that part of the value
of capital goods which represents the amount of specified duty
paid on such capital goods.
(iv) The relevant documents required for the purpose of
availing credit of the specified duty paid on such capital goods
under rule 57T shall bear the name of the manufacturer along
with that of the financing company.
(4) If a manufacturer of final products has taken credit on any
capital goods and subsequently it so happens that any refund of
the duty paid by the manufacturer of capital goods or importer of
capital goods, as the case may be, is allowed to him for any
reason, then the user manufacturer shall accordingly adjust the
amount of credit in his credit account and if such adjustment is
not possible for any reason, the user manufacturer shall pay the
amount in cash equal to the amount of refund allowed to the
manufacturer or, as the case may be, to importer of capital
goods.
(5) If a user manufacturer has taken credit on any capital goods
and subsequently it so happens that any additional amount of duty
is recovered from the manufacturer of such capital goods or
importer of such capital goods, as the case may be, then the user
manufacturer shall be allowed an additional credit equal to the
amount of such additional amount recovered.
(6) The provisions of sub-rule (5) shall not apply in cases where
the duty on capital goods has been short levied or short paid or
has been erroneously refunded by reason of fraud, collusion or
any wilful mis-statement or suppression of facts or contravention
of any provisions of the Act or the rules made thereunder with
the intent to evade payment of duty.
(7) (i) The additional credit as per sub-rule (5) shall be
allowed by the proper officer on the basis of a certificate
issued by the Superintendent of Central Excise having
jurisdiction over the factory, or as the case may be, by the
proper officer in the customs area, from where such capital goods
were originally cleared.
(ii) The said certificate shall indicate full description of the
capital goods, original duty paid and particulars of the
documents under which the capital goods were cleared from the
factory or, as the case may be, from the customs area and also
the differential duty recovered from the manufacturer or the
importer.
(8) No credit of the specified duty paid on the capital goods
shall be allowed, if the manufacturer, claims depreciation under
section 32 of the Income-tax Act, 1961 (43 of 1961), or as
revenue expenditure under any other provisions of the said Income-
tax Act, in respect of that part of the value of capital goods
which represents the amount of specified duty on such capital
goods.
57 S. Manner of utilisation of the capital goods and the credit
allowed in respect of duty paid thereon. - (1) The capital goods
in respect of which credit of specified duty has been allowed
under rule 57Q may be -
(i) used in the factory of the manufacturer of the final
products; or
(ii) removed, after intimating the Assistant Commissioner of
Central Excise, having jurisdiction over the factory and after
obtaining dated acknowledgement of the same, from the factory
for home consumption or for export, on payment of appropriate
duty of excise leviable thereon or for export under bond, as if
such capital goods have been manufactured in the said factory.
(2) In a case, -
(a) where capital goods are removed without being used from
the factory for home consumption, on payment of duty, or
for export on payment of duty of excise, such duty of excise
shall in no case be less than the amount of credit that has
been allowed in respect of such capital goods under rule
57Q;
(b) where capital goods are removed after being used in the
factory for home consumption on payment of duty of excise or
for export under rebate on payment of duty of excise, such
duty of excise shall be calculated by allowing deduction of
2.5 per cent. of credit taken for each quarter of a year of
use or fraction thereof, from the date of availing credit
under rule 57Q; and
(c) where capital goods are sold as waste and scrap, the
manufacturer shall pay the duty leviable on such waste and
scrap.
(3) Credit of the specified duty allowed in respect of any
capital goods may be utilised towards payment of duty of excise,-
(i) on any of the final products manufactured in the
factory of the manufacturer; or
(ii) on the waste, if any, arising in the course of
manufacture of the final products; or
(iii) on the capital goods themselves if such capital goods
are removed under sub-rule (1).
(4) No part of the credit of duty allowed, shall be utilised save
as provided in sub-rule (3) or, shall be refunded in cash or by
cheque.
(5) On an application made by a manufacturer of the final
products, the Commissioner may, subject to such conditions and
limitations as he may impose, permit a manufacturer having credit
in his account in Form R.G.23-C maintained under rule 57T and
lying unutilised, on account of shifting of the factory belonging
to the manufacturer, to another site, or on account of change in
ownership, or change in the site of a factory resulting from
sale, merger, amalgamation or transfer to a joint venture with
the specific provision for transfer of liabilities of the old
factory, to transfer such unutilised credit to such transferred,
sold, merged or amalgamated factory.
(6) Transfer of unutilised credit under sub-rule (5) shall be
allowed only if the stock of inputs as such or in process, if
any, is also transferred along with the factory to the new site
or ownership and that the stock of such inputs is duly accounted
for to the satisfaction of the Commissioner.
(7) Notwithstanding anything contained in sub-rule (1), a
manufacturer may, after intimating the Assistant Commissioner of
Central Excise having jurisdiction over the factory and obtaining
dated acknowledgement of the same, remove the capital goods to a
place for test, repairs or re-conditioning of such capital goods
and return the same to his factory, after the said purpose has
been carried out, for further use as such capital goods by
following the procedure as may be specified by the Central Board
of Excise and Customs or the Commissioner.
(8) Notwithstanding anything contained in sub-rule (1), a
manufacturer may, with the permission of the Commissioner and
subject to such terms and conditions and limitations as he may
impose, remove the moulds and dies, without payment of duty, to a
job-worker for the purpose of production of goods on his behalf
and according to his specifications.
(9) The Commissioner shall not permit a manufacturer to remove
the moulds and dies under sub-rule (8) unless the manufacturer
undertakes to bring back the said moulds and dies and the goods
so manufactured, within a period of three months from the date
of their removal or such extended period as the Commissioner may
permit.
(10) In case where moulds and dies removed under sub-rule (8)
are not received back within a period of three months from the
date of removal of such moulds and dies or within such extended
period as the Commissioner may permit, duty shall be paid
equivalent to the credit taken on the said moulds and dies.
57T. Procedure to be observed by the manufacturer. - (1) Every
manufacturer intending to take credit of the duty paid on the
capital goods under rule 57Q shall, before receipt of the capital
goods, file a declaration with the Assistant Commissioner of
Central Excise having jurisdiction over his factory, indicating
therein the particulars of the capital goods, description of the
final products manufactured in his factory and such further
information as the Assistant Commissioner may require, and shall
obtain a dated acknowledgement of the said declaration.
(2) The manufacturer shall also file a declaration in accordance
with the provisions of sub-rule ( 3) of rule 57R to the Assistant
Commissioner of Central Excise having jurisdiction over his
factory to the effect that such capital goods shall not be used
exclusively for production of a final product which is exempt
from the whole of the duty of excise leviable thereon (other
than a final product which is exempt from the whole of the duty
of excise leviable thereon under any notification where exemption
is granted based upon the value or quantity of clearances made in
a financial year) or is chargeable to nil rate of duty and also
that he shall not claim depreciation under section 32 of the
Income-tax Act, 1961 (43 of 1961), or as revenue expenditure
under any other provision of the said Income-tax Act, in respect
of that part of the value of capital goods which represents the
amount of specified duty paid on such capital goods.
(3) In case where a manufacturer was not in a position to make
the declaration under sub-rule (1) and makes the declaration
subsequently but ordinarily within a period of one month or in
exceptional cases, within a further period not exceeding, in any
case, more than another two months from the date of receipt of
the said capital goods in the factory, the Assistant Commissioner
of Central Excise may, on sufficient cause being shown to him,
allow the filing of the declaration.
(4) A manufacturer intending to take credit of the duty paid on
the capital goods under rule 57Q shall intimate the particulars
regarding full description of the capital goods along with brand
name and identification marks or numbers if any, particulars of
documents evidencing payment of duty on such capital goods, and
any other particulars as the Commissioner may require, to the
jurisdictional Superintendent of Central Excise, as soon as may
be, on receipt of such capital goods.
(5) In case where a manufacturer has already installed or started
using capital goods without filing the intimation under sub-rule
(4), the Assistant Commissioner of Central Excise may, on
sufficient cause being shown by the manufacturer for not
intimating the receipt of the capital goods to the said
Superintendent, allow the intimation of receipt of such capital
goods to be filed for the purpose of sub-rule (4).
(6) The manufacturer shall be allowed to take the credit of
specified duty only if the capital goods are received in the
factory premises of the manufacturer under the cover of a
document specified under rule 57G evidencing the payment of duty
on such capital goods.
(7) The Assistant Commissioner may, on sufficient cause being
shown to him, allow the manufacturer to take credit of the
specified duty on capital goods, paid by a contractor or job
worker who undertakes the job of initial setting up, renovation,
modernisation or expansion of the plant on behalf of the
manufacturer of final products, subject to such procedure and
conditions as may be specified by the Commissioner or the
Central Board of Excise and Customs.
(8) If the Assistant Commissioner of Central Excise is satisfied
that the duplicate copy of the invoice has been lost in transit,
he may allow a manufacturer of final products, to take credit
under sub-rule (6) on the basis of the original copy of the
invoice.
(9) A manufacturer of the final products shall maintain an
account in Parts I and II of Form R.G.-23C.
(10) A manufacturer of the final products shall, within five
days after the close of each month, submit to the Superintendent
of Central Excise a return indicating the particulars of the
capital goods received during the month and the amount of credit
taken along with the original duty paying documents and extracts
of Parts I and II of Form R.G. - 23C, and the Superintendent of
Central Excise shall after verifying their genuineness, deface
such documents and return the same to the manufacturer.
(11) Notwithstanding anything contained in sub-rule (1), the
Commissioner may, having regard to the nature, variety and extent
of production or manufacture or frequency of removals-
(i) fix in relation to any assessee or class of assessees a
period shorter than one month for filing the return as required
to be filed under sub-rule (10) ; or
(ii) permit that the return may be filed by the assessee within
a period not exceeding twenty one days after the close of each
month.
(12) In the case of a manufacturer availing of any exemption
based upon the value or quantity of clearances in a financial
year, the provisions of sub-rule (10) shall have effect in that
financial year as if for the expression "month" occurring
therein, the expression "quarter" were substituted.
57U. Recovery of credit wrongly availed of or utilised in an
irregular manner. - (1) Where credit of the specified duty paid
on capital goods under rule 57Q has been taken on account of an
error, omission or mis-construction, on the part of an officer or
a manufacturer, or an assessee, the proper officer may, within
six months from the date of filing the return required to be
submitted in terms of sub-rule (10) of rule 57T, and where no
such return as aforesaid is filed, within six months from the
last date on which such return is to be filed under the said
rules, serve notice on the manufacturer or the assessee who has
taken such credit requiring him to show cause why he should
not be disallowed to such credit and where the credit has already
been utilised, why the amount equivalent to such credit should
not be recovered from him.
(2) Where the credit under rule 57Q has been taken by reason of
fraud, wilful mis-statement, collusion or suppression of facts,
or contravention of any of the provisions of the Act or the rules
made thereunder with intent to evade payment of duty, the
provisions of sub-rule (1) shall have effect as if for the words
`six months' occurring therein, the words `five years' were
substituted.
Explanation. - Where the service of the notice is stayed by an
order of a court of law, the period of such stay shall be
excluded from computing the aforesaid period of six months or
five years, as the case may be.
(3) The proper officer shall, after considering the
representation, if any, made by the manufacturer or the assessee
on whom notice is served under sub-rule (1), determine the amount
of the credit to be disallowed (not being in excess of the amount
specified in the show cause notice) and thereupon such
manufacturer or assessee shall pay the amount equivalent to the
credit disallowed, if the credit has been utilised, or shall not
utilise the credit thus disallowed.
(4) If any capital goods in respect of which credit has been
taken are not fully accounted for as having been disposed off in
the manner specified in this section, the manufacturer shall,
upon a written demand being made by the Assistant Commissioner of
Central Excise, pay the duty leviable on such capital goods
within three months of the receipt of the notice of demand.
(5) Where a manufacturer or an assessee fails to pay the amount
determined under sub-rule (3) or under sub-rule (4), as the case
may be, within three months from the date of receipt of notice of
demand, he shall pay, in addition to the amount so determined,
interest at such rate as may be fixed by the Board under section
11AA of the Act, from the date immediately after the expiry of
the said period of three months till the date of payment.
(6) Where the credit of duty paid on capital goods has been taken
wrongly by reason of fraud, wilful misstatement, collusion or
suppression of facts or contravention of any of the provisions of
the Act or the rules made thereunder, with intent to evade
payment of duty, the person who is liable to pay the amount
equivalent to the credit disallowed as determined under sub-rule
(3) shall also be liable to pay a penalty equal to the credit so
disallowed.
(7) (i) Where the credit disallowed is reduced by the
Commissioner of Central Excise (Appeals), the Appellate Tribunal
or a court of law, the penalty under sub-rule (6) shall be
payable on such reduced amount of credit disallowed.
(ii) Where the credit disallowed is increased or further
increased by the Commissioner of Central Excise (Appeals), the
Appellate Tribunal or, as the case may be, a court of law, the
penalty shall be payable on such increased or further increased,
amount of credit disallowed.
(8) Notwithstanding anything contained in sub-rule (3) or sub-
rule (5), where the credit of duty paid on capital goods has been
taken wrongly on account of fraud, wilful mis-statement,
collusion or suppression of facts or contravention of any of the
provisions of the Act or the rules made thereunder with intent to
evade payment of duty, the person who is liable to pay the amount
equivalent to the credit disallowed, as determined under sub-rule
(3), shall also be liable to pay interest at such rate as may be
fixed by the Board under section 11AA of the Act from the first
day of the month succeeding the month in which the credit was
wrongly taken, till the date of payment of such amount.
Explanation . - For the removal of doubts, it is hereby declared
that the provisions of this sub-rule shall not apply to cases
where the credit disallowed became payable before the 23rd day of
July, 1996.
(9) Where the credit disallowed is reduced by the Commissioner of
Central Excise (Appeals), the Appellate Tribunal or a court of
law, the interest under sub-rule (8) shall be payable on such
reduced amount of credit disallowed.
(10) Where the credit disallowed is increased, or further
increased, by the Commissioner of Central Excise (Appeals), the
Appellate Tribunal or a court of law, the interest under sub-rule
(8) shall be payable on such increased, or further increased,
amount of credit disallowed.".
(NAVNEET GOEL)
UNDER SECRETARY TO THE GOVERNMENT OF INDIA