TIOL-DDT 2691
23 09 2015
Wednesday

THE CBEC deserves a big bouquet of congratulations and thanks for this masterly circular. This is real ‘ease of doing business'.

In Ratan Melting & Wire Industries Vs Commissioner of Central Excise, Bolpur - 2008-TIOL-194-SC-CX-CB a Constitution Bench of the Supreme Court held:

So far as the clarifications/circulars issued by the Central Government and of the State Government are concerned they represent merely their understanding of the statutory provisions. They are not binding upon the court. It is for the Court to declare what the particular provision of statute says and it is not for the Executive. Looked at from another angle, a circular which is contrary to the statutory provisions has really no existence in law .

Now in a major step in reducing frivolous litigation, Board clarifies,

Board Circulars contrary to the judgements of Hon'ble Supreme Court become non-est in law and should not be followed. Reference of such circulars should be made to the Board so that further action of rescinding these circulars can be expeditiously taken up. Board may also initiate such action suo-moto. All pending cases on the issue, including those in the Call-Book, decided after the date of the judgement should, confirm to the law laid by the Hon'ble Supreme Court or High Court, as the case may be, irrespective of whether the circular has been rescinded or not.

The above direction would also apply to the judgements of Hon'ble High Court where Board has decided that no appeal would be filed on merit. However, where appeal has been filed by revenue against the High Court's order, pending adjudication should be transferred to the Call-Book and such appeals should be kept alive.

There seems to be a perceptible change in the attitude of the Board - for the better.

While lavishly praising the Board for this very laudable circular, I cannot refrain from pointing that there are a couple of typographical mistakes, which should have been avoided.

CBEC Circular No. 1006/13/2015-CX., Dated: September 21, 2015

Consistency and discipline are of far greater importance than winning or losing of court proceedings

CONSISTENCY and discipline are of far greater importance than the winning or losing of court proceedings,declared the Supreme Court in Ranadey Micronutrients case - 2002-TIOL-184-SC-CX.

The concept that Board Circulars are binding on the Department had been successfully confused all these years. What the Courts had held was that the Board should not be seen arguing against its own instructions and they should be binding on the field.

Once upon a time it was believed that adjudicating authorities are independent judicial officers who were required to pass reasoned orders based on their own reasoning un-influenced by instructions or advice from their superior officers. The Central Excise adjudication manual published in 1988 (that was perhaps its last publication), in para 39 directed that Board Orders and reference numbers should not be quoted in the Adjudication Orders.  It was further advised that Law ministry's opinion is confidential and should never be communicated in the same language to even sub-ordinate officers. There were several Assistant Commissioners who used to boast “I am an adjudicating authority and not bound by the Board orders.”

A few years down the lane and the whole concept changed. It is now well known that the Board circulars are binding on the departmental officers. This concept enunciated by the Supreme Court was also taken to ridiculous levels. What the Courts meant was that if a Board circular gave a benefit to the assessee, the department is barred from arguing that the circular was wrong.

In  Dhiren Chemicals -  2002-TIOL-83-SC-CX, the Supreme Court explained the meaning of, “appropriate duty has already been paid”, but went on to add that if there was any circular of the Board contrary to the Supreme Court's interpretation, the Board's interpretation would prevail (in favour of the assessee). This was taken to mean that the Board was supreme and can give instructions even against the Supreme Court's orders and they would be binding on the officers.

In the famous  RANADEY MICRONUTRIENTS v COLLECTOR OF CENTRAL EXCISE - 2002-TIOL-184-SC-CX  case, the Supreme Court held that,

Such circulars are not advisory in character but binding on the Central Excise Officers - Department cannot be allowed to plead that such circular was not valid.

One should have thought that an officer of the Ministry of Finance would have greater respect for circulars such as these issued by the Board. It does not lie in the mouth of the Revenue to repudiate a circular issued by the Board on the basis that it is inconsistent with a statutory provision.  Consistency and discipline are of far greater importance than the winning or losing of court proceedings.

It is not open to the Revenue to raise a contention that is contrary to a binding circular issued by the Board.

In COLLECTOR OF C. EX., VADODARA v DHIREN CHEMICAL INDUSTRIES  -  2002-TIOL-83-SC-CX, the Supreme Court observed,

We need to make it clear that, regardless of the interpretation that we have placed on the said phrase, if there are circulars which have been issued by the Central Board of Excise and Customs which place a different interpretation upon the said phrase that interpretation will be binding upon the Revenue.

This binding nature was doubted in COMMISSIONER OF CUSTOMS, CALCUTTA v INDIAN OIL CORPORATION LTD. -  2004-TIOL-23-SC-CUS, by one of the judges and it was suggested that the matter needs to be examined by a Constitutional bench.

Proposition of law that even after highest Court settles law on the subject, view expressed by Central Board on same point of law should still hold the field until and unless revoked, is doubted - Customs authority should act subservient to decision of highest Constitutional Court and not to Circular of Board which is denuded of its rationale and substratum under impact of authoritative pronouncement of highest Court.

Common thread not running through decisions of Supreme Court - Dicta/observations in some of decisions need to be reconciled/explained - Need to redefine succinctly extent and parameters of binding character of circulars of Board looms large - Constitution Bench's authoritative pronouncement of subject, is desirable.

Though it was suggested that this issue requires examination by a Constitution bench, it was not really referred.

Finally the Supreme Court Constitution Bench in Ratan Melting & Wire Industries Vs Commissioner of Central Excise, Bolpur - 2008-TIOL-194-SC-CX-CBhe ld that a circular which is contrary to the statutory provisions has really no existence in law. And this is what the Board reiterates after 7 years, probably because there are still doubts in the field about this.

Yesterday I asked a senior IRS Officer whether this latest circular will be followed by the field adjudicators. He said, "even if they don't follow, the assessee can easily win in the next stage of appeal."

Board Circulars were not anyway binding on the

1. Assessees

2. Tribunals

3. High Courts and

4. Supreme Court

Sometime back we had covered the classic case of an Assistant Commissioner who dismissed the entire theory of precedence and held that the decision of the High Court in the case of another assessee was not applicable to the assessee before her. Each assessee had to get his own order. [Please see DDT 2342 & DDT 2384.]

Consistency and discipline are of far greater importance than the winning or losing of court proceedings.

CBEC Invests Principal Commissioners with Powers of Chief Commissioners

IT is nearly two years since the cadre review which has created several posts of Principal Chief Commissioner, Chief Commissioner and Principal Commissioner were created in the CBEC has come into force. But they were not able to fill those vacancies so far. Even today they don't have a single Principal Chief Commissioner. And many posts of Chief Commissioners are lying vacant.

By Office Order of the Central Board of Excise and Customs No.  126/2015, dated 20th August, 2015, CBEC posted several Principal Commissioners as Chief Commissioners.

Can they post a Principal Commissioner as an additional charge Chief Commissioner? Will he then become a Chief Commissioner?

Now the CBEC has issued notifications investing the powers of Chief Commissioner on those Principal Commissioners who have been given additional charge as Chief Commissioners. Were these PCs exercising the powers of Chief Commissioners illegally during the last one month?

Notification No. 19/2015-CE (N.T.), Dated: September 18, 2015,

Notification No. 94/2015 - Customs (NT), Dated: September 18, 2015,

Notification No. 18/2015-ST, Dated: September 18, 2015.

CBEC Worried about Attrition - CBEC has mixed two Rules of Pension Rules; Rule 48 and 48A and issued a confused instruction?

DDT reported yesterday, the Board instructions on Voluntary Retirement. Responding to that Mr. SJ Singh, a retired Commissioner writes in.

Under Rule 48A, an officer has absolute discretion to opt for retirement after completing 30 years of service. Government can refuse to allow the request only if the officer is under suspension. Government has no discretion to refuse the request if the officer is not under suspension but otherwise facing disciplinary proceedings. The proceedings can continue as they due in the case of officer who superannuate but is facing disciplinary proceedings.

If the officer is not under suspension, he has, under Rule 48, an absolute right to proceed on retirement without assigning any reason. The government is neither required to accept the request nor has power to reject it. The notice becomes effective on the expiry of three months period. The officer is also allowed to avail the leave in his credit. The leave can be for the entire notice period, if there is a sufficient balance of leave. Government can, however, refuse the leave.

A formal order of VRS is required to be passed for office procedures. The retirement benefits are allowed to the officer only after the order is passed. The babus in the office shall not proceed to initiate the process of calculation and payment of the benefits unless they have the order from the competent authority accepting the retirement request of the officer. It is for this reason that the officers insist for the formal order on their request for retirement. In absence of the formal order the officer shall have to approach to the Tribunal/Court for obtaining his retirement benefits. The route of Tribunal/Court is both expensive and long.

As far as Rule 48A (VRS after 20 years of service) is concerned Government has the discretion to reject the request. Under this Rule government may ask for reasons for the request and examine its validity before taking decision on the request.

By issuing common instructions both for Rule 48 and 48A, the CBEC has, unfortunately, introduced the element of confusion. The field formations may not allow request for retirement under Rule 48 because of this Circular and the officers shall have to approach Tribunal/Court for the relief. The Tribunal/Courts in umpteen cases allowed the request. The Circular shall increase the non-productive work of the government and shall create avoidable bitterness in the mind of employee wanting to exercise the right granted to him under Rules.

I am stating the position in law as I also faced this situation. I was Commissioner of Central Excise and after completing 32 years of service I applied for voluntary retirement under Rule 48. Chairperson CBEC rejected my request without assigning any reason. In my case the appointing authority was the President of India and only the Finance Minister could have exercise the delegated power of the President. Chairperson was not competent to deal with my request. My representation to the CBEC against the decision of Chairperson never saw the light of the day. I had to make representation to the Finance Minister wherein I explained the legal position. Only on intervention of Finance Minister, my request to retire was accepted from the date of expiry of my notice period.

Would you please publish it in your columns so that offices who want to proceed on voluntary retirement have honourable exit route and have not to run from pillar to post to exercise their right ?

Another Netizen writes in:

What if I am being forced to take a decision which I think is potentially against the interest of the Revenue/Nation and it is backed by very powerful people in the department who operate only through telephonic instructions and if I continue and refuse to put my signature or put negative remarks, then these powerful people will see to it that my VRS application will be rejected. Hence if employee wants to continue working for three months during the notice period or quit working from that date of application itself should be the prerogative of the employee on VRS.

Once an employee decides to quit, there is no point in continuing him notwithstanding his above par skills that may be indispensable to the Government. I am not in agreement with this review and justification. if such a choice is given an employee will be condemned to bear with all the injustices he might be facing.

Until tomorrow with more DDT

Have a nice day.

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