Circular No. 401/34/98-CX dated 9/6/1998
Steps for reducing litigation and review orders passed by Commissioner (Appeals) and CEGAT - Instructions.
The Government has been concerned about the mounting litigations specially in CEGAT
and apex court on various issues concerning levy and collection of Customs and Central
Excise duties and has 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. arc 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 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 orders 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 undertaken/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, ii 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.
Sd/-
(A.K. Roy)
Deputy Secretary to the Govt. of India
F.No. 390/160/98-IC
(Please refer
CIR NO.710/26/2003-CX, DT.23/04/2003)
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