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Regarding Raising of Protective Demands Consequent to CERA Objection
Modification of Circular 5/ 83 - CX6 dated 10.3.83
Central
Excise Circular No. 674 dated 1st November 2002
I
am directed to draw your attention to Board�s circular No. 5/83-CX6 dated
10.3.83 issued from F. No. 210/28/81-CX6 and circular No. 444/10/99-CX dated
12.3.99 issued from F. No. 210/1/99-CX6 wherein it has been, inter alia,
directed that immediately on receipt of objection from CERA, demand-cum-show
cause notice should be issued without any loss of time even if the Central
Excise officers do not agree with Audit�s point of view. Latter the
instructions were modified to say that protective demands may not be raised
pursuant to CERA objections which are contrary to orders issued by Board under
section 37 B of Central Excise Act, 1944.
2.
The matter has been re-examined by the Board. It is observed that the
field formations continue to issue protective demands on the basis of the
objections raised by CERA, which are contrary to Board�s circulars/
instructions (not issued under section 37 B). Since the settlement of audit
objection takes time, the protective demands go on piling up. In this regard, it
is the consistent view of the Apex Court [Collector or Central Excise, Patna vs
Usha Martin Industries] {1997)(94) ELT 460(SC)} that the instructions/ circulars
issued by Board or Ministry are binding on the field formations. These
instructions/ circulars to have legal backing, as these are part of the
technical functions, which are performed under the statue by Board. Therefore,
the raising of protective demands contrary to Board�s circulars/ instructions
shows inherent inconsistency. The Apex court has also held in the case of
Ranadey Micronutrients vs Collector of Central Excise that �� Consistency
and discipline are of far greater importance than the winning or losing of Court
proceedings.� [1996(87) ELT19 (SC)]. In view of above it has become imperative
to modify earlier instructions on the subject.
3.
According, it has been decided that wherever Board�s instructions or
circulars (whether issued under section 37B or not) exist on a particular issue,
no protective demands should be raised on the basis of CERA objection if the
objection is contrary to such Board�s instruction or circulars. However, in
all such cases, the matter should be immediately referred to PAC section of the
Board for resolving the issue with the C& AG of India.
3.
Field formations may please be informed suitably.
4.
Receipt of the same may be acknowledged.
5.
Hindi version will follow.
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