Law laid down compelling Department to return un-relied upon documents – new Rule 24A of CER, 2002 to see light of the day

By TIOL News Service

NEW DELHI, JULY 06, 2009: NEARLY three years ago, the present CBEC Chairman who was then Member(CX)  wrote a D.O letter to the Chief Commissioners that it had come to the notice of the Board that seized records which were of no use to the department were not being returned inspite of requests made by the parties and that this was one of the reasons for the offices to resemble a godown. [See DDT-492]

While drawing attention of the Chief Commissioners to the Circular 42 of 1988, dated 24.05.1988, which carried such instructions, the Member sought compliance of the same and offered a practical suggestion – that the show cause notice incorporates a clause to the effect that un-relied upon documents may be collected by the concerned notices within 30 days of receipt of the show cause notice; the designation and address of the officer responsible for returning the said documents should also be indicated in the notice.

Quite possibly, these D.O letters were not having the desired effect and the department which has the most primitive method of record keeping started losing these documents retrieved eons ago and thus losing good cases.

In the case of M/s Silicon Graphics System (India) Private Ltd., the Bombay High Court vide its order dated 19.04.2006 in W.P 1235 of 2006 observed -

14.Vide circular dated 1988 issued by the Department of Revenue, Ministry of Finance, Government of India, directions have been issued to the concerned officers in relation to the seized documents and return thereof, that in order to avoid the complaints, ordinarily, the department itself should take initiative to return the documents which are not considered useful from the angle of any proceedings to be initiated against the concerned parties. Unrelied documents in the show-cause notice may not be relevant for the purposes of Revenue but may be of some relevance to the affected party in preparation of the reply to the show cause notice. It cannot be said that the request made by the petitioner for return of the unrelied documents to enable them to prepare their reply to the show-cause notice was frivolous.

So, the Central Government felt that enough is enough and has now converted the 1988 Circular into a Rule.

Vide notification 17/2009-CE(N.T), a new Rule 24A is being inserted in the Central Excise Rules, 2002 and which reads -
“24A. Return of records. - The books of accounts or other documents, seized by the Central Excise Officer or produced by an assessee or any other person, which have not been relied on for the issue of notice under the Act or the rules made thereunder, shall be returned within thirty days of the issue of said notice or within thirty days from the date of expiry of the period for issue of said notice:
Provided that the Commissioner of Central Excise may order for the retention of such books of accounts or documents, for reasons to be recorded in writing and the Central Excise Officer shall intimate to the assessee or such person about such retention.”

Simply put, documents which are either seized or produced by an assessee or any other person and are not relied upon in the Show Cause notice are required to be returned within 30 days of issue of the notice or within 30 days from the date of expiry of the period for issue of said notice.  When read with section 110 of the Customs Act, 1962 this expiry date sounds interesting.

We very well know how long it takes for issuance of show cause notice so the net effect is for all to see.  And as always, there is a proviso clause which is a dampener to the spirit of the new rule.

By the way, it is apparent that the order of the Commissioner of Central Excise by which he “orders” for retention of such books of accounts or documents is also appealable under the law. 

Another round of litigation in the pipeline!