Latest effort to restructure board's circulars needs modification

The issue whether the Central Board of Excise and Custom's circulars are binding has been ever-changing. We used to swear by the board's orders till the Supreme Court in the case of Orient Paper Mill decided in 1970 that they were not binding. After that, we used to avoid mentioning these orders in the adjudication.

Then in 1999 in the case of Paper Products Vs CCE, the Supreme Court said that they were binding. In its last order in 2008 in the case of Rattan Melting, the apex court said that while the rulings of the board were binding on the department, they were not binding or valid if they were against the Supreme Court's order.

In the last seven years, the board should have completed the task of deleting all its orders, which are against the Supreme Court order. However, better late than never. On September 21, 2015, the board through its circular (No.1006/13/2015-CX) asked the commissioners to examine all such circulars, which are against its order and report to it. The board also will start action on its own to find out such circulars, which are otiose.

This exercise is quite a waste of time. The reasons are the following:

This shifting of the burden to the commissioners and chief commissioners is a wrong approach. This will mean that all the commissioners now will have to do the same exercise throughout the country. There must be about 200 commissioners who will do this. This is doing the same thing 200 times.

Secondly, the commissioners do not have access to the main information regarding where the board has accepted an order issued by a high court or even the Supreme Court. Without this information, the commissioners are in no position to undertake the task properly.

Lastly, the board has a Judicial Cell, which deals with and has access to all the high court and Supreme Court orders. In fact, that is the Central Cell, which has everything that is necessary to undertake this job of rooting out orders that had become otiose.

While deleting otiose circulars, the board is well-advised to do some restructuring of the circulars and instructions.

There are two types of circulars, namely, circulars and instructions. A sample study for two years gives the following figures:

	Circulars	Constructions
2014	9	8
2013	45	11

The circulars have a running serial number such as 1/2014, 2/2014. But instructions have no such thing. So, it is very easy to miss a circular. Moreover, there is no justification for issuing two different types of circulars/instructions. Circulars also contain the expression instruction. The subjects are also the same. There is no meaningful distinction between them.

My suggestion is that all instructions in future should be renamed as circulars only and past instructions should be reissued as circulars. Tariff circulars should be issued only under Section 37B of the Excise Act and Section 151A of the Customs Act. Sections 37B and 151A were introduced in 1985 to enable the board to remove the uncertainty in following its order, created by the 1970 order of the Supreme Court.

So these two sections should be utilised. Unfortunately, for many years no circular under these two sections has been issued. This is one reason why the litigations are 'boiling and bubbling' to use a Shakespearean language from Measure for Measure.

There should be no instructions but only circulars with a continuous serial number. There should be series for Customs, Excise, Service Tax, Judicial, Valuation and Administrative. Tariff circulars should be issued under Section 37B and Section 151A.

The whole set of circulars should be published in the form of a book with a pink cover and named as the Pink Book as we used to have in the 1960s and 70s. The Pink Book will introduce certainty in classification, which is extremely necessary for the taxpayers as well as for the officers of the department. It will be also be a great guide for the commissioners' appeal and the Tribunal.

smukher2000@yahoo.com