Benefits to Informers

Government functions with the help of the taxes collected from the citizens.  The tax levy is a system, which is generally not to the liking of the public.  Hence, the tax evasion is the major field, were Government revenue is lost.  To enhance the detection of evasion Government has framed the system of rewards to the people who help in the detection of the tax evasion.  In Central Excise also reward is given to the people who give concrete information about tax evaders. The following are a few guidelines for the people who like to help detection of Central Excise Duty evasion:

 1) What is an information?

 An information is any useful message received from the public or any person for that matter revealing fraudulent evasion of duty.  It is the message based on which the department officials conduct further enquiry and investigation.

 2) Who can give information?

 Any person who is aware of the illegal activities of the manufacturing units or any Central Excise assessee can give an information. 

3) Who is an informer?

 Any person other than the Officers of the Central Excise who has the requisite information relating to evasion of duty is an informer.

 4) Whom should an informer contact?

 An informer with an information and can contact Central Excise department and deliver the information to any Officer of the rank of Inspector and above.   

5) How to give an information?

 An information has to be given in writing addressed to the Head of the department, after affixing the signature of the person giving the information along with the left-hand thumb impression.

 6) What should an information contain?

 An information should contain details of the evasion known, such as name & address of the unit, method adopted for the evasion, the persons responsible and all other relevant details connected with the evasion.

7) What are the common methods of evasion adopted with regard to Central Excise?

 a) Misdeclaration  / under-valuation of the product. 

Manufacture of the products without the informing the Department. Selling the same at a higher price after showing a lesser value to the department.  

b)  Suppression of production 

Producing the goods without properly accounting the same in the records. 

c)  Clandestine removal. 

Removing the goods without accounting the same and with out payment of duty. Even a transporter who stores such goods is liable for action. 

8) How the department receives an information? 

The department acknowledges the information.  The name and address of the informer is kept confidential.  

9) What benefit does an informer get? 

An informer is given the reward if the information given is correct and the duty payable by the assessee is recovered. 

10) What is the eligible reward amount and how it is disposed? 

The eligible reward amount is up to 20% of the duty evasion detected and realised. The amount is disbursed in the following manner: 

a) Upto 25% of eligible reward amount after issue of Show Cause Notice.

b) Another 25% of eligible reward amount after adjudication of the case.

c) Balance of 50% of the eligible reward amount after conclusion of the appeal proceedings. 

11) When are the above rewards sanctioned? 

The first two categories of rewards are advance rewards sanctioned after issue of Show Cause Notice and Adjudication of the case respectively, provided the competent authority to sanction reward is satisfied that there is reasonable chance of sustenance of the case in appellate forums. The third category is final reward it is sanctioned after conclusion of the Appeal proceedings.  The reward is disbursed after confirming the identity of the informer, in the presence of two witnesses. 

12) What is the punishment for false information?

If any false information is given to the department, action can be initiated against the informer under Section 182 of Indian Penal Code.