Instructions to officers of customs [Section 151A] :
In the exercise of their quasi-judicial functions, the adjudicating authorities under the Customs Act are required to act independently without any bias. In Orient Paper Mills Ltd vs. UOI 1978 (2) ELT J345 (SC): AIR 1969 SC 48., it was held that the adjudicating authorities were totally independent and could not be directed or guided by any instructions from administrative superiors. But, over time, particularly, in the context of section 37B of the CE Act, the Supreme Court itself has changed its view.
In practice it has been found necessary to issue some guidelines to all adjudicating and assessing authorities to ensure uniformity in decisions and practice. It has been found difficult to maintain such instruction legally, and therefore, as specific provision has been inserted by Customs (Amendment) Act 1985, whereby the CBEC has been empowered to issue such orders, instructions and directions to officers of custom in order to ensure
– uniformity in the classification of goods; or
– with respect to the levy of duty thereon
– the implementation of any other provisions of the Customs Act or of any other law for the time being in force, in so far as they relate to any prohibition, restriction or procedure for import or export of goods.
Such orders, instructions and directions may be issued to officers of customs as the board may deem fit and such officers of customs and all other persons employed in the execution of the Act shall observe and follow such orders, instructions and directions of the Board.
No such orders, instructions or directions shall be issued
(a) so as to require any such officer of customs to make a particular assessment or to dispose of a particular case in a particular manner; or
(b) so as to interfere with the discretion of the Commissioner of Customs (Appeals) in the exercise of his appellate functions.
The relevant Case laws are given below:
(a) When the board has issued instruction regarding classification of goods in a particular manner such instructions are binding on them, even though the circular may not recite that it has been issued in exercise of power under section 37B. This case is pari material with Sec. 151A. [Ranadey Micronutrients vs. CCE, 1996 (66) ECR 638 SC: 1996 (87) ELT 19 (SC)]
(b) A public notice issued by one Custom House will bind all Customs authorities. If the department considers that a public notice is erroneous, it must be withdrawn.[SAIL vs. CC,2000 (115) ELT 42 (SC)]
(c) Also refer a leading decision under the Income Tax Act, 1961, K.P. Varghese vs. ITO AIR 1980 SC 1922 : 1981 (131) ITR 597 (SC). In this case, binding nature of the circulars has been discussed far more elaborately than under case laws under the Central Excise or Customs Laws.
It is necessary to at least make an attempt to reconcile the apparent contradiction between the view expressed in Orient Paper Mills case and the view expressed in later decisions in the preceding paragraphs. It is submitted that the correct view would be to hold that the departmental instructions such as circulars and trade notices bind the departmental authorities under all circumstances. But, they do not bind them in such a manner that even if the departmental view is antithetical to the assessee’s contentions, facts and evidence on record, the adjudicating authority has to blindly follow it. In such a situation, the adjudicating authority is entitled exercise his independent judgment as a quasi -judicial authority and arrive at an independent finding. However, if the adjudicating authority fails to do so, it is open to the assessee to challenge the correctness of the departmental instruction itself, or the mindless manner in which the adjudicating authority followed such instructions. This view finds support in CCE vs. Usha Martin Industries, 1997 (72) ECR 257 SC 1997 (94) ELT 460 (SC) case.
Exercise of power under section 151A of the Customs Act, 1962 is restricted to matters pertaining to classification of goods or levy of duty thereof.
[Vinod Kumar Agarwal v. UOI 2008 (223) E.L.T. 19 (Bom.)]