Circular No. 401/34/98-Central Excise
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs, New Delhi
Subject: Steps for reducing litigation and review orders passed by Commissioner (Appeals) and CEGAT- Instructions Regarding.
The Government of has been concerned about the mounting litigations specially in CEGAT and apex court on carious issues concerning levy and collection of Customs and Central Excise duties and had been seriously examining steps to reduce such litigation. Thus, changes in the basic provisions of the law including rules, notifications and the tariff entries etc. are being effected whenever difference of opinion between the Department and trade and industry comes to the notice of the Government to make its intentions clear and to reduce litigation in future.
2. It is considered very essential that a regular monitoring be undertaken and a feed back given to the Board by the Commissioners/ Director Generals/ Chief Commissioners about such issues which are becoming subject matter of frequent disputes in the field formations. This will enable quick corrective steps to be taken where necessary by amending the laws/ notifications etc. or by way of issue of suitable further guidelines from Board about the Department”s view on the issue which can be applied uniformly in all Commissionerates/ Customs Houses to avoid different practices which itself becomes a major point of grievance/ litigation by the trade and industry. Chief Commissioners are specially requested to keep watch and report such issues by frequent i interaction with their Commissioners [including Commissioner (Appeals)] as also with trade and industry. They must, while sending their reports, inter alia, highlight any differential classification or valuation practices which have come to their notice being followed in different zones/ Commissionerates, conflicting views being taken by different Benches of CEGAT or High Courts etc. on important questions of law affecting revenues. Copies of such references could be addressed to the concerned Member in the Board with a copy to Member (L & J) for further examination and taking a quick view and for issue of appropriate guidelines from the Board.
3. It has also been observed by the Board that often, appeals are being filed in routine against orders passed by Commissioner (Appeals) even when stakes involved are very small and not of recurring nature and issues are not of basic/ general importance. It has also come to Board”s notice that though as compared to the past, the number of cases where CEGAT”s orders adverse to the Department being recommended for review and filing a Civil Appeal before Supreme Court have come down, still there are many cases where civil appeals to apex courts are being recommended not consistent with the guidelines issued earlier.
4. Board would like to emphasise that an adjudicating/ appellate authority must examine very carefully the issues before him, the stand projected by the Assessee and the views of the Department, take note of the legal provisions and case law and the rulings of the Board if any on the issues etc. and pass a reasoned order. The adjudicating appellate authority must also ensure that principles of natural justice are properly followed. Once this is done, there will be fewer challenges to the orders issued and it would also lead to substantial reduction in the cases being recommended for appeal.
5. A number of instructions have been issued in the past for exercising careful scrutiny and some restraint before filing/ recommending appeals against orders of Commissioners. Board would like to reiterate that review of the order of Commissioner (Appeals)- for filing of appeal against them before CEGAT and the adjudication orders passed by the Commissioner of Customs/ Central Excise – for filing appeal before CEGAT should normally be under-taken/recommended on sufficiently strong grounds after full application of mind and satisfying that the Department has reasonable chances of success if the appeal is filed. The appeal should not be filed in routine especially against the orders of Commissioner (Appeals) merely on ground of technicalities. (Board”s instructions under Circular No. 337/53/97-CX dated 3rd October, 1997 are also relevant and these should be followed)
6. As regards steps for reducing number of civil appeals being filed in supreme Court, Board would like to reiterate its instructions under F.No. 390/170/92-JC dated 13th January, 1993. Chief Commissioners and commissioners must strictly keep them in view while sending recommendations to the Board wherever they are not in agreement with CEGAT”s view point. In particular, if should be ensured that appeals are recommended only when significant amounts (over Rs. 5 lakhs) and substantial question of law are involved and where there is no direct ruling or case law of the Supreme Court on the subject -as laid down in the said instructions. We should not be involved in avoidable and infructuous litigation.
7. Receipts of the instructions should be acknowledged and appropriate steps taken to ensure their strict compliance in future.
