The Central Board of Indirect Taxes and Customs (CBIC) has clarified the pre-show cause notice consultation is not mandatory for recovery of duties short levied or short paid or erroneously refunded.
As a trade-facilitation measure, a concept of pre-show cause notice consultation in Central Excise and Service Tax was introduced vide Board’s instruction dated 21.12.2015, issued vide F. No. 1080/09/DLA/MIS/15. Vide the said Instruction, it was clarified that “Pre-show cause notice consultation with the Principal Commissioner and Commissioner is being made mandatory prior to the issue of show cause notice (SCN) in the case of demand of duty above Rs.50 Lakhs (except for preventive/offense related SCNs)”.
Para 5.0 of the Master Circular No. 1053/02/2017-CX dated 10.03.2017 merely reiterates the principle of pre-show cause notice consultation enunciated vide aforementioned Instruction dated 21.12.2015. Further, vide Circular No.1076/02/2020-CX dated 19.11.2020, it was clarified that “Pre-show cause notice consultation with the assessee, prior to issuance of SCN in case of demand of duty Rs.50 Lakhs (except for preventive/offense related SCNS) is mandatory & shall be done by the Show cause notice issuing authority”.
Subsequent to this, a reference has been received from the DGGI to clarify whether DGGI formations fall under the exception/exclusion category of the CBIC’s instruction supra dated 21.12.2015 or otherwise.
The CBIC has reiterated that pre-show cause notice consultation shall not be mandatory for those cases booked under the Central Excise Act, 1944 or Chapter V of the Finance Act, 1994 for recovery of duties or taxes not levied or paid or short levied or short paid or erroneously refunded by reason of fraud or collusion or wilful mis-statement or suppression of facts or contravention of any of the provision of the Central Excise Act, 1944 or Chapter V of the Finance Act, 1994 or the rules made thereunder with the intent to evade payment of duties or taxes.
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