Concept of Call Book in Indirect Taxes
Updated as on 22.01.2015
For departmental use only
E-BOOK
CONCEPT
OF
CALL BOOK
IN
INDIRECT TAXES
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Page 0
Concept of Call Book in Indirect Taxes
INDEX
SL.
TOPIC
PAGE
1.
Introduction
2
2.
Cases to be kept in Call Book
2
3.
Transfer of Case to / out of Call book
4
4.
Periodical Review of Call book
5
5.
Other Instructions
9
6.
List of Important Board’s Circular /Instruction
on Call Book
10
7.
Quiz for test your knowledge
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Concept of Call Book in Indirect Taxes
Introduction
According to the Manual of Office Procedure (also referred to in short as the
OPM) brought out by the Department of Administrative Reforms and Public
Grievances (DARPG), a call book is required to be maintained by a Department in
which a case, which had reached a stage where no action could, or needed to be
taken to expedite its disposal for at least 6 months (e.g. cases held up in the law
courts), could be transferred with the approval of a competent authority. Cases
transferred to the call book are not included in the monthly statement of pending
cases.
2. In the context of our Department, the Call book cases are those Show Cause
Notices (SCNs), which cannot be adjudicated immediately due to certain specified
reasons and adjudication is to be kept in abeyance by transferring such cases to call
book.
Cases to be kept in Call Book
3.
The Central Board of Excise and Customs (Board), vide Circular No.
162/73/95-CX.3, dated 14-12-1995, specified the following categories of cases
which can be transferred to call book:A.
Cases in which the Department has gone in appeal to the appropriate
authority.
This category refers to cases wherein on identical issue, the Department has filed
appeal before higher appellate authority against the order passed by the lower
authority, which was against the Government.
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Concept of Call Book in Indirect Taxes
For example, on certain issue, the CESTAT has passed order which is against the
Department. The Department has filed appeal before High Court/Supreme Court
against the order of CESTAT. If any SCN on the same issue is pending for
adjudication in respect of same or different party, the same should be transferred to
call book till matter is decided by the Hon’ble High Court /Supreme Court.
B. Cases where injunction has been issued by Supreme Court/High Court
/CESTAT, etc.
Vide CBEC Circular No. 992/16/2014-CX, dated 26.12.2014, the Board clarified
that Cases admitted by the Settlement Commission may be transferred to the Callbook, as it is already covered under Category “(ii) cases where injunction has
been issued by the Supreme Court/High Court/CEGAT etc.” mentioned in
Circular dated 14.12.1995. In respect of cases pending before Settlement
Commission, it has been further clarified that where there are multiple noticees, the
case can be transferred only in respect of those noticees who have made
application in the Settlement Commission, and whose case has been admitted by
Settlement Commission. Such cases should be taken out of the Call-Book after
Settlement Order has been issued or where the case has been reverted back for
adjudication.
C.
Cases where audit objections are contested.
The Audit objections received by the Department from Central Excise Revenue
Audit (CERA) can be put into two categories(i) where the CERA objection is admitted by the Department and necessary
proceedings are initiated by the Department to recover/realise the
revenue.
(ii) Where the CERA objection is not admitted by the Department and has
reasons to contest the CERA objection.
Wherever the CERA objection is not accepted by the Department, then in its
response, the Department is required to communicate the grounds / arguments to
the C&AG Office. However, in such case, (protective) SCN is issued so as to avoid
the duty demand becoming time barred and SCN is, then, transferred to call book.
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Concept of Call Book in Indirect Taxes
Sometimes CERA objection directly questioning the correctness of the
CBEC Circular/Instruction is also raised by C&AG office. Such case is required to
be immediately brought to the notice of the Board by the field formations. In such
case, the matter is defended by Board.
If, on consideration of the Departmental stand, the C&AG office accept the
Department reply on the issue, then the protective SCN issued on the basis of CRA
objection is taken out of call book category and subjected to process of
adjudication by issuing order-in-original dropping the demand.
Where after discussion and correspondence in the matter with the C &AG
office, the Department agrees with the views of the C & AG office, then the SCN
kept in the call book is taken out of call book and adjudicated on merit.
D. Cases where the Board has specifically ordered the same to be kept
pending and to be entered into the call book.
From time to time, Board’s issue instruction to keep SCN on certain issues in the
call book till further instruction. On finalization of Departmental views /stand on
the issue, the instructions are again issued to the field formations to take such
SCNs out of call book and to adjudicate the same.
As an example under this category, the issue of inclusion of “after sales service and
pre-delivery charges in the assessable value” can be mentioned. First, vide Circular
No. 909/29/09-CX, CBEC directed all its field formations to transfer SCN issued
on the subject matter to call book. Later, vide Circular No. 936/36/2010-CX, dated
27/10/2010, it directed field formations to decide the cases pending in the call book
on the issue of inclusion of after sales service and pre-delivery inspection charges
in the Assessable value in the light of CESTAT Order dated 13.8.2010.
Transfer of Case to/ out of Call book
4.
A SCN can be transferred to call book if any of the situation mentioned
above exist. SCN cannot be transferred on ground (s) other than those specifically
mentioned in the above said Board Circular dated 14.12.1995 read with Circular
No. 992/16/2014-CX, dated 26.12.2014. Further, a SCN can only be transferred to
call book with the prior approval of the Commissioner in charge.
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Concept of Call Book in Indirect Taxes
5.
In one of it’s Audit Report, the C & AG pointed out that in spite of clear
instructions of the Board on transfer of casesto call book, there are several other
types of cases, which are transferred to call book in violation of the instructions of
the CBEC. These cases are:(i)
Cases ordered for de-novo adjudication by the Courts;
(ii)
Cases pending for want of Chemical Examiner’s report;
(iii)
Provisional Assessment cases
Transfer to cases to call book on above mentioned grounds, not specified in CBEC
Circular dated 14.12.1995 is not correct and should not be done.
Periodical Review of Call book
6.
The Board had issued instructions to Commissioners to review the cases
transferred to call books on a monthly basis. If grounds, on which a case has been
transferred to call book, no longer exist, then the case should be taken out of the
call book and adjudicated. [Ref: Board’s DO Letter F. No. 101/2/92-CX.3, dated
04.03.1992 and Board’s Circular No. 53/90-CX.3, dated 06.09.1990].
Procedure to be followed on Receipt of Audit Report and Audit Paras.
7.
The Chairman, CBEC, vide D.O. letters dated 24.05.2010 and 13.10.2010,
issued comprehensive instruction with regard to action to be taken on receipt of
Audit Report and adjudication / appeal proceedings of SCNs arising out of the
Audit Paras respectively.
A.
Action to be taken by the Chief Commissioner on Receipt of Audit
Report from C &AG.
On receipt of Audit Reports, the following course of action should be taken
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Concept of Call Book in Indirect Taxes
(i)
Where audit objections pertains to the Commissionerate falling within
Chief Commissioner’s zone and has been admitted (either by the
Commissionerate or by the Board), it should be ensured that remedial
action is taken immediately in respect of all formations in the jurisdiction,
having similar excisable products/ nature of transactions indicated in the
Audit objections.
(ii)
Where the audit objections has been admitted by the Commissionerate
or by the Board, immediate action should be taken to adjudicate the cases
and effect recovery of revenue adjudged payable to the Government in
accordance with law.
(iii)
Where the Audit Para pertains to a Commissionerate, not falling within
the Zone, it may be verified whether such lapses have occurred in the
zone. If similar lapses are noticed in the jurisdiction of zone, immediate
remedial action should be taken after due examination of the issue
involved. This should be done immediately by circulating relevant copies
to the field formations for identifying similar problem areas/ units in the
zone so that corrective steps are taken to safeguard revenue.
(iv)
Where the audit objection has been admitted, the present stage of
adjudication/ appeal/court cases, (if any), in the case should be intimated,
indicating also the efforts made by the Commissioners for getting the case
finalized and for effecting recovery of dues. There is the necessity and
imperativeness of timely conclusion of adjudication proceedings so that the
Government revenue, which is due, is realized expeditiously. It is
important to note that C&AG office while pointing out cases of delay in
adjudication, often ask for fixation of responsibility on the officers
responsible for undue delay.
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Concept of Call Book in Indirect Taxes
(v)
Where the Draft Audit Para has not been included in the C &AG report,
the matter should be pursued by the Commissioners with the Jurisdictional
AG.
(vi)
Details
of
recent
Court/CESTAT
decision/
Board’s
instructions,
notifications, circulars/ classification/ Trade Notices etc. having a direct
bearing on the stand taken by the Commissioner/Board in respect of
pending Audit Paras should be sent to C&AG office, if these were not
sent/available at the time of sending comments at the DAP Stage.
(vii) In case, the jurisdiction of any of the units involved in the Audit Paras has
shifted to some other Commissionerates, the Commissionerates presently
having jurisdiction over such units should take immediate necessary action
to send the Action Taken Notes to the Ministry.
B.
Procedure to be followed on receipt of Audit Paras of the C&AG
(a)
Upon the Commissionerate admitting an audit objection, the SCN should
be issued immediately and in no case later than 30 days.
(b)
In cases where the Commissionerate contests the audit objection,
protective SCN are still required to be issued pending decision by the
office of the CAG, and they should be kept in call book till settlement of
objection by the CAG.
(c)
In cases where a SCN is issued pursuant to admitting an audit objection,
the same should be adjudicated at the earliest.
(d)
During the course of adjudication proceeding and examination of facts
and law, should the adjudicating authority come to the conclusion that the
SCN (issued pursuant to an admitted objection) is not sustainable, instead
of deciding the case immediately in favour of the assessee, the
Commissioner should refer the matter to the Commissioner (PAC)
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Concept of Call Book in Indirect Taxes
seeking that the audit para be contested. The Commissioner (PAC) shall
submit the revised recommendation of the Commissionerate to the
concerned Member, for a decision in the matter. If the proposal of the
Commissionerate is approved, revised comments/ATN should be sent to
the C&AG. The Commissionerate should in the meantime, transfer the
case into “call book” pending a decision by the CAG.
(e)
In cases, where an adjudicating authority has confirmed a SCN, issued
pursuant to an admitted audit objection, but the appellate authority sets
aside the order (excepting cases where orders for de-novo proceedings
are issued), before the Commissioner or the “Constituted Committee”
decide to accept such an order, a self-contained and well-reasoned
proposal should be sent to the Commissioner (PAC) recommending that a
revised ATN contesting the Audit Objection be sent to the CAG. Further,
as these matters are under statutory time limits, simultaneous preparation
for filing of appeal should be initiated.
(f)
Board has also directed field formation that suitable co-ordination
mechanisms between various branches, such as Audit, Adjudications,
Legal & Review should be set up so that the above said procedure is
followed without exception.
A copy of Chapter 6 of the Audit Report No. 25 of 2011-12[Indirect taxesCentral Excise and Service Tax) which, inter alia, pertains to call book cases is
available as a link document and the same may be perused to have a feel of Audit
Report given by C &AG office periodically by critically examining the specific
aspects of working of the our department.
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Concept of Call Book in Indirect Taxes
Other Instructions
8.
Vide Board’s Instruction issued from F. No. 232/160/2008-CX.7, dated
11.08.2011, the Chief Commissioner were directed to ensure that the protective
SCNs issued in relation to contested audit objections are not inadvertently
adjudicated.
9. It was mentioned that several instances have been noticed where objections of
the Audit converted to SOF and higher levels, are contested by jurisdictional
Commissioners and yet the Show cause cum demand notices issued in relation to
such contested objections enter the adjudication stream and get adjudicated and
dropped, as well as accepted in review, while they should have remained in the call
book. Such inadvertence, which is contrary to Board’s Instruction, placed the
Ministry in a severely awkward position.
10.
In the light of above, the Chief Commissioner were directed to ensure
effective control mechanism in their respective zones so that the above type of
situation does not occur.
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Concept of Call Book in Indirect Taxes
List of Important Board’s Circular /Instruction on Call Book
Sr.
No.
1.
2.
3.
4.
Board’s Circular
Circular No. 162/73/95-CX,
dated 14/12/1995
Circular No. 385/18/98-CX,
dated 30/3/1998
Circular No. 719/35 /2003-CX,
dated 26.05.2003
Circular No. 909/29/09-CX,
dated 11.12.2009
5.
Circular No. 936/26/2010-CX,
dated 27/10/2010
6.
Chairman, CBEC,D.O. letter F.
No. 233/2/2010-CX. 7, dated
24/5/2010
Chairman, CBEC D.O. letter F.
No. 233/2/2010-CX. 7, dated
13.10/2010
Board’s Instruction F. No.
232/160/2008-CX 7, dated
11.8.2011
7.
8.
9.
Circular No. 992/16/2014-CX,
dated 26.12.2014
Remarks
Specified categories of cases to be
included in Call book
Direction to review of all the cases of
provisional assessment transferred to
call book and directions to comply with
Board’s Directions
Checks on delays-maintenance of call
book
Direction to field formation to transfer
SCN issued on the issue of inclusion of
After Sales Service and Pre-delivery
Charges in the assessable value
Direction to field formation to decide
the cases pending in the call book on
the issue of inclusion of after sale
service and pre-delivery inspection
charges in the Assessable value in the
light of CESTAT order 13.8.2010
Action to be taken by Chief
Commissioners on Receipt of Audit
Report
Adjudications/appeal proceeding in
SCNs related to Audit Paras.
Direction issued to field formation to
ensure that protective SCN issued in
relation to contested audit objections
are not inadvertently adjudicated.
Inclusion of cases filed in the
Settlement Commission in the “Call
Book”
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Concept of Call Book in Indirect Taxes
Circular No. 162/73/95-CX, dated 14/12/95
F.No. 101/20/93-CX.3
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs, new Delhi
Subject :
Checks on delays - Maintenance of 'Call Book' - Instructions regarding
Kindly refer to the instructions contained in the Board's D.O. letter F.No. 101/2/92-CX.2 dated 4th
March, 1992 directing that a case should be transferred to the Call Book with the approval of
Commissioner/ Commissioner (Judicial) / DG etc. as the case may be . It is further stated the Board's
Circular No. 53/90-CX.3 dated 6.9.1990, specifies the circumstances under which a pending case can be
transferred to Call Book. As per the extracts of the Manual of Office Procedure enclosed with the said
circular "if a current case has reached a stage when no action can or need be taken to expedite its
disposal for at least 6 months (e.g.cases held up in law courts) it may be transferred to the Call Book with
the approval of the Competent Authority".
2. The Commissioner, Customs & Central Excise, Delhi has requested for inclusion of certain
categories of cases for
(i)
Cases in which the Department has gone in appeal to the appropriate authority.
(ii)
Cases where injunction has been issued by Supreme Court/ High Court/ CEGAT, etc.
(iii)
Cases where audit objections are contested.
(iv) Cases where the Board has specifically ordered the same to be kept pending and to be
entered into the call book.
Sd/(Rajiv Bhatia)
Under Secretary (CX.3)
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Concept of Call Book in Indirect Taxes
Circular No. 385/18/98-CX, dated 30-3-1998
[From F. No. 101/3/98-CX.3]
Government of India
Ministry of Finance (Department of Revenue),
Central Board of Excise & Customs, New Delh
i
Check on delays - Maintenance of Call Book
Subject : Instructions - Regarding.
Please find enclosed copy of paras 42 to 45 of the 14th Report of the PAC
(11th Lok Sabha). 1996-97 The PAC has observed that the present manner of
transfer of cases to Call Books is not satisfactory. Such transfers raise doubts
regarding the manner of disposal of some of the provisional assessment cases
themselves, from the list of outstanding cases. While the Board had issued
instructions to Commissioners to review the cases transferred to call books on a
monthly basis, it is observed that no such review is actually being done. (Board’s DO
Letter F. No. 101/2/92-CX.3, dated 4th March, 1992 and Board’s Circular No. 53/90CX.3, dated 6-9-1990).
The 2. Board vide its Circular No. 162/73/95-CX.3, dated 14-12-1995
specified the following categories of cases which can be transferred to call book viz :
Cases in which the Department has gone in appeal to the 1. appropriate authority.
Cases where injection has been issued by Supreme Court/High 2. Court/CEGAT, etc.
Cases where audit objections are contested. 3.
Cases where the Board has specifically ordered the same to be 4. kept pending and to
be entered into the call book.
The 3. PAC has desired that a special review of all the cases of provisional
assessment, transferred to the call book should be immediately undertaken and
follow-up action taken, in order to ensure that the prevalent instructions have been
complied with and proper revenue is collected.
You 4. are requested to ensure that Board Circulars on the subject are
scrupulously adhered to. A special review of all the cases of provisional assessment
transferred to the call book should be immediately undertaken and a report may be
furnished to the Commissioner (PAC) directly within 15 days of the receipt of this
letter.
Receipt
5. of this circular may kindly be acknowledged.
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Concept of Call Book in Indirect Taxes
Copy of Para 42 to 45
When enquired about the mechanism to dispose of the call book 42. cases, the Chairmen,
CBEC deposed :“As far as the mechanism of it is concerned, the instructions provided that the Call
Book must be reviewed by the officers every month. Firstly, the whole thing needs to be
brought out in the form of a statement and every quarter it needs to be reviewed whether
the issue is a dispute on the basis of which a case was transferred to the call book and if it
has been resolved. In case the issue has been resolved through an issue of appellate
order or a Board decision or by some other appellate forum which we can take those case
out of the call book and finalise them.”
43.From
the details of the cases of provisional assessments pending,
furnished to the Committee subsequent to evidence, it was seen that the number of
such cases transferred to call book and the differential duty involved thereon was as
follows (Table IX)
Table -IX
Period
No. of cases
Amount (Rs. in crores)
31-3-1995
469
830.46
31-3-1996
476
916.05
31-12-1996
450
Recommendation : (Para No. 44)
962.86
The Committee find that 450 cases of provisional assessments involving a total
differential duty of Rs. 962.86 crores were transferred to the Call Book as on 31st
December, 1996. Significantly, these cases were neither included earlier in the
details of the pending cases of provisional assessments nor were the date relating
thereto separately available with the Board/Ministry. During evidence, the Chairman,
Central Board of Excise and Customs admitted that there had been instances where
cases of provisional assessments kept pending for want of reports from laboratories
were even transferred incorrectly to the Call Book. Undoubtedly, the present manner
of transfer of cases to Call Book is not satisfactory. In fact, such transfers raise
doubts regarding the manner of disposal of some of the provisional assessment
cases themselves from the list of outstanding cases. What is further surprising is
that although the Board had issued instructions to the Commissioners to review the
cases transferred to Call Books on a monthly basis, the Committee’s examination
revealed that no such review had actually been done nor had the Board bothered to
monitor the fate of those instructions. The committees are unhappy with this
situation, they desire that a special review of all the cases of provisional assessment
transferred to the call book should be immediately undertaken and follow up action
taken in order to ensure that the prevalent instructions have been complied with and
proper revenue is collected. The Committee also desired that the Ministry should
take stern action against officers responsible for irregular and incorrect transfer of
cases of provisional assessments to the Call Book. The Mininstry should further
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Concept of Call Book in Indirect Taxes
review the system of transfer of cases to the Call Book and ensure that all such
cases are transferred strictly in terms of the instructions and are properly subjected
to the prescribed periodical review both by the Commissioners as well as the Board.
Recommendation : (Para 45)
The Committee also desire that in future while exhibiting the details of the
cases of provisional assessment pending such cases which have been transferred
to Call Book should also invariably be shown alongwith the relevant data.
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Concept of Call Book in Indirect Taxes
Circular No. 719/35/2003-CX., dated 28-5-2003
F.No. 101/2/2003-CX.3
Government of India
Ministry of Finance (Department of Revenue)
Central Board of Excise & Customs, New Delhi
Subject :
Checks on delays — Maintenance of ‘Call Book’ instructions — regarding
Kindly refer to Board’s Circular No. 53/90-CX. 3, dated 6-9-1990 specifying the circumstances
under which a pending case can be transferred to call book that if a current case has reached a
stage where no action can or need be taken to expedite its disposal for at least 6 months (e.g.
cases held up in law Courts) it may be transferred to the call book with the approval of
competent authority and instructions issued vide Board’s D.O. Letter F.No. 101/2/92-CX. 3,
dated 4-3-1992 directing that a case should be transferred to the call book with the approval of
Commissioner/Commissioner (Judicial/ Director General etc. as the case may be. It was further
clarified vide Circular No. 162/73/95-CX., dated 14-12-1995 [1996 (81) E.L.T. T9] that only
following type of categories of cases can be transferred to Call Book :(i)
Cases in which the Department has gone in appeal to the appropriate authority,
(ii)
Cases where injunction has been issued by Supreme Court/ High Court/CEGAT, etc.
(iii) Cases where audit objections are contested.
(iv)
Cases where the Board has specifically ordered the same to be kept pending and to be
entered into the call book.
The matter has again been examined with reference to PAC’s 2. recommendation on Paras 2.5
and 2.6 of the C & AG Report for the year 1998-99 relating to inordinate delay for recovery of
confirmed demands and non-adjudication of demands respectively contained in 39th Report. In
this regard it is found that the existing instructions of the Board on the issue are not being
scrupulously followed by the field formations. The pendency of call book cases continues to be
very high. Therefore, the Board while reiterating its earlier instructions, has decided that the
respective Chief Commissioner should monitor progress of disposal of call book cases
specifically to see whether 1.
Call Book cases have been reviewed by the CCEs.
2.
Any appreciable progress is noticed.
3.
Any avoidable delays are there.
It is further directed that a one-time comprehensive review 3. of all the pending call book cases
will be done by respective CCEs. The Chief Commissioner may monitor such review
periodically in their respective zones. The progress report of the call book cases should continue
to mention in the MTR as well as in the monthly statements of the progress achieved in “Key
Result Areas”.
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Circular No. 909/29/09-CX
F.No. 6/4/2009-DS (CX.1 & 4)
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Custom
New Delhi, the 11 December 2009
To,
Director General (All)
Chief Commissioners of Central Excise including LTU (All)
Commissioners of Central Excise (All)
Sir/Madam
Subject: Inclusion of After Sale Service and Pre-delivery Inspection Charges in the
assessable value.
30th
Please refer to the Minutes of the Conference of Chief Commissioners at Shillong on
and 31st October 2009 with regard to the issue mentioned above at point No 2.9.
2.
On this issue, the Board has vide point No 7 in circular No. 643/34/2002-CX dated
2002 clarified as follows:
What about the cost of
after
sales
service
charges and pre delivery
inspection
(PDI)
charges, incurred by the
dealer
during
the
warranty period ?
1-7-
Since these services are provided free by the dealer on
behalf of the assessee, the cost towards this is included
in the dealer's margin (or reimbursed to him). This is one
of the considerations for sale of the goods (motor
vehicles, consumer items etc.) to the dealer and will
therefore be governed by Rule 6 of the Valuation Rules
on the same grounds as indicated in respect of
Advertisement and Publicity charges. That is, in such
cases the after sales service charges and PDI charges
will be included in the assessable value.
3.
The tribunal in the case of Maruti Udyog Limited [2004 (170) E.L.T. 245 (Tri. - Del.)] held
that these charges are not includible in the assessable value as these do not accrue to the
manufacturer. But recently, the Tribunal has in the case of Maruti Udyog Ltd, [2009
(238) ELT 186 (T-Del)] doubted the correctness of its earlier decision referred to above, and
referred the following question for consideration by a Larger Bench.
“Whether the charges towards pre-delivery inspection and after-sale-services received by
dealers from buyers of the cars are to be included in the assessable value of cars in the light of
the definition of ‘transaction value’ given in Section 4(3)(d) of the Central Excise Act.”
4.
Further, the Supreme Court has in the case of Grasim Industries (C.A. No.3159/2004),
referred the question as to whether the concept of transaction value under new Section 4 has
made any material departure from deemed normal price concept of erstwhile Section 4(1)(a) of
the Act for consideration of the Larger Bench.
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5.
In view of the above decisions referring the matter to larger bench, the conference was of
the view that in this matter show cause notices should be issued demanding duty on the value of
these activities, and transferred to Call Book pending the decision of Larger Bench on the issue.
6.
The view expressed in the Chief Commissioners Conference has been accepted by the
Board and accordingly you may direct the officers in your jurisdiction to continue issuing show
cause notice and transfer them to call book, pending the decision of larger bench on the issue.
7.
Receipt of this circular may be acknowledged
8.
Hindi version would follow.
Yours faithfully
Madan Mohan
Under Secretary (CX.1)
F.No. 6/44/2000-CX1
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Circular No. 936/26/2010 –CX
F.No. 6/4/2009-DS (CX.1 & 4)/Pt.
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Custom
New Delhi, the 27th October, 2010
To,
Directors General (All)
Chief Commissioners of Central Excise including LTU (All)
Commissioners of Central Excise (All)
Sir/Madam
Subject: Inclusion of After Sale Service and Pre-delivery Inspection Charges in the
assessable value.
Attention is invited to point No. 7 of Board’s circular No. 643/34/2002-CX dated 1-7-2002
and to circular No. 909/29/09-CX dated 11.12.2009 on the above subject.
2.
Board vide its earlier circular No. 643/34/2002-CX dated 1-7-2002 had clarified that Aftersale Service and Pre-delivery Inspection charges were liable to be included in the assessable
value under Section 4 of the Central Excise Act 1944. Further vide circular No. 909/29/09-CX
dated 11.12.2009, it was directed to transfer all the show cause notices issued on the above
subject to call book pending the decision of the larger bench of CESTAT in the case
of Maruti Udyog Ltd.
3.
The larger bench of CESTAT vide its order dated 13.8.2010 in appeal No. 1958 of 2008 in
the aforesaid case, has now held that Pre-delivery Inspection charges and After-sale Service
charges collected by the dealers are to be included in the assessable value under Section 4 of
the Central Excise Act, 1944.
4.
In view of the aforesaid decision of the larger bench, the cases pending in the call book
may be decided keeping in view the law laid down by the larger bench of CESTAT.
5.
Receipt of this circular may be acknowledged
6.
Hindi version would follow.
Yours faithfully
Madan Mohan
Under Secretary (CX.1)
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Circular No. 992/16/2014-CX
dated 26.12.2014
F. No. 201/26/2013-CX.6
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Custom
To
Principal Chief Commissioner/ Chief Commissioner of Central Excise (All),
Principal Chief Commissioner/ Chief Commissioner of Central Excise & Customs (All)
Principal Commissioner/ Commissioner of Central Excise (All)
Principal Commissioner/ Commissioner of Central Excise & Customs (All)
Web-master, CBEC
Sub: Inclusion of cases filed in the Settlement Commission in the “Call-Book”-reg.
Madam/Sir,
Reference has been received in the Board from field that cases which are admitted in the
Settlement Commission should be allowed to be transferred to Call-book in addition to the three
category of cases prescribed by Board, for inclusion in Call Book, vide Circular No. 162/73/95-CX
dated 14.12.1995 issued vide F. No. 101/20/93-CX.3 read with Circular No. 53/90-CX dated
06.09.1990.
2. The issue has been examined and it is clarified that:I.
Cases admitted by the Settlement Commission may be transferred to the Call-book, as it is
already covered under Category “(ii) cases where injunction has been issued by the
Supreme Court/High Court/CEGAT etc.” mentioned in Circular dated 14.12.1995,
II.
Where there are multiple noticees, the case can be transferred only in respect of
those noticees who have made application in the Settlement Commission, and whose
case has been admitted by Settlement Commission,
III.
Cases shall be taken out of the Call-Book after Settlement Order has been issued or where
the case has been reverted back for adjudication.
3. Difficulties faced, if any, in implementation of this Circular may be brought to the notice of the
Board. Hindi version follows.
Yours faithfully,
(ROHAN)
OSD (CX-6)
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Report No. 25 of 2011-12 (Indirect Taxes – Central Excise and Service Tax)
CHAPTER VI - SHOW CAUSE NOTICES AND CALL BOOK CASES
6.1
Introduction
Section 11A of Central Excise Act, 1944 for Central Excise and Section 73 of the
Finance Act, 1994 for Service Tax provide for issue of Show Cause Notice (SCN) when
any duty of excise/ service tax has not been levied or has been short-levied or shortpaid or erroneously refunded.
6.2
Maintenance and updating of SCN control register
We observed that there was no uniform practice of maintaining a centralized record to
monitor issue of SCNs and their follow up.
On our test check of 46 commissionerates for central excise and service tax, we noticed
that there was no centralised record of all the cases which required issue of SCN. Once
issued, SCNs were monitored through different records such as 335J Register, Draft
SCN Register, SCN movement register, SCN issue register etc. Consequently, there
was a monitoring system once SCNs were issued but nothing to ensure that SCNs had
been issued in every case of detection of non-levy, short-levy etc. wherever required.
Since there was no centralised record, we had to restrict our examination to
ascertaining whether SCNs were being issued in all cases, as required by the
instructions of the Board, in respect of the observations raised by audit parties (CERA)
of the CAG during 2008-09. We found instances where SCNs were not issued and
reasons for not doing so were not found on record, as detailed below.
6.2.1 In Patna Commissionerate, we observed that Bettiah central excise
range did not initiate the process to issue SCN in one CERA observation (involving
`1.07 lakh) relating to M/s Harinagar Sugar Mills Limited. Similarly, the service tax range
I, Bankipur did not initiate the process of issuing SCNs in one para relating to M/s
Neelkamal Steel Pvt. Ltd., Patna and three paras relating to M/s Bharti Airtel Ltd., Patna
involving a total amount of `58.93 lakh, pointed out by CERA.
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In reply the department intimated (August 2011) that SCN of `1.07 lakh and `1.50 lakh
had now been issued in respect of M/s. Harinagar Sugar Mills Limited and M/s.
Neelkamal Steel Pvt. Ltd., respectively. On the three paragraphs of `57.43 lakh related
to M/s. Bharati Airtel Ltd., it was intimated (August 2011) that the amounts involved in
the three cases were included in SCNs issued during January 2010 to March 2010.
6.2.2 In four selected central excise ranges under Nagpur Commissionerate, out of 93
paras issued by CERA, action was taken only in 43 paras either by way of issue of SCN
or otherwise and in remaining 50 paras, no action was taken. In respect of service tax,
we observed that SCN had not been issued from eight months to twenty months in nine
cases detected by CERA/ IAP/ Preventive Branch.
6.2.3 In two selected divisions under Bhubaneswar II Commissionerate, against 23
CERA objections involving ` 14.78 crore, SCNs were issued only in two cases.
6.3
Call Book cases
The Board’s circular dated 14 December 1995 provides that the following four types of
cases that are pending adjudication are to be transferred to the Call Book.

Cases in which the Department has gone in appeal to a quasi judicial or a judicial
authority.

Cases where injunction has been issued by Supreme Court/ High Court etc.

Cases where audit objections are contested.

Cases where the Board has specifically ordered the same to be kept pending
and to be entered into the call book.
Once transferred to the Call Book, the cases are not to be included in the list of cases
pending adjudication. The cases in the call book are to be reviewed every month to
identify any cases that are to be taken out of the call book and adjudicated. We found
instances where these provisions were not adhered to, as detailed below:
6.3.1 Cochin Commissionerate issued four show cause notices to an export oriented
unit, DC Mills, Alapuzha, during 2005 to 2009, based on an internal audit objection for
non-payment of jute cess amounting to `49.56 lakh. The commissionerate sought
clarification from the Board and transferred these cases to the call book. The
Comissionerate did not received any reply from the board (November 2011). As these
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SCNs did not fall in any of the four categories of cases mentioned in Circular dated 14
December 1995, the transfer of the cases to call book was not in order. They were
required to be taken out of the call book and added to the list of cases pending
adjudication.
6.3.2 During scrutiny of cases transferred to call book in central excise Division, Alwar,
we observed that SCN No V (85)01/Dem./2009 and SCN No. V (76 &74)13/Dem/09
were issued on the basis of observations of CERA. The Department agreed to both the
objections. However, both the cases were transferred to call book in the month of
January 2010, without the approval of the competent authority i.e. the Commissioner.
The reasons for the unauthorized transfers to the call book were not intimated to us
(November 2011).
6.3.3 In Belapur Commissionerate, we found four instances, where cases were not
taken out of Call Book leading to long delays in adjudication. The cases are described
below:
6.4

a. A SCN issued to M/s IOC Ltd. in April 2000, on the basis of CERA objection,
was kept pending in Call Book even after the observation was closed by us in
November 2005. It was taken out of Call Book and adjudicated only in October
2009.

b. A SCN issued to M/s Singh Scrap Processors was taken out from Call Book
(April 2008), three years after decision of CESTAT (February 2005) and
adjudicated after another year (June 2009). There was a total delay of more than
four years after the CESTAT judgment.

c. A SCN issued (February 1998) to M/s. Joglekar Refabrication and Ceramic
Pvt. Ltd. was removed from the Call Book (February 2009), ten years after the
acceptance of CEGAT order (September 1999).

d. A SCN issued (February 2000) to M/s Balmer Laurie & Co. was kept pending
in call book for more than four years even after the decision of Supreme Court in
2005.
Cases remanded by Commissioner (Appeals)
The Finance Act, 2001, amended Section 35A (3) of Central Excise Act, 1944, relating
to the powers of Commissioner (Appeals). It provided that “The Commissioner
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(Appeals) shall after making such further enquiry as may be necessary pass such order
as he thinks fit just and proper, confirming, modifying or annulling the decision or order
appealed against”. The Supreme Court, in its decision in the case of MIL India Limited,
held that the power of the Commissioner (Appeals) to remand had been taken away by
the amendment in Finance Act, 2001. On the basis of the above judgment, the Board, in
its Circular dated 25 July 2008, affirmed that the powers had been withdrawn to speed
up adjudication process because on remand, cases were pushed back to the starting
point.
We observed that even after the issue of the above circular by the Board, six cases had
been remanded back by Commissioner (Appeals), Cochin. In all these cases, the
decisions were accepted by the Cochin Commissionerate during review. As the remand
orders were in contravention of the provisions and instructions of the Board, the
department could have filed appeals against them instead of allowing the adjudication
process to revert to the starting point. The reasons for non-compliance with the
provisions had not been intimated to us (November 2011).
Recommendation No. 13
A centralised record of all cases where SCNs are likely to be issued, may be maintained
and monitored by the commissionerates to ensure that SCNs are actually issued. In the
automated environment of ACES, the same record could be used to monitor
subsequent stages of action taken.
The Board stated in the exit conference that all cases detected need not necessarily
lead to issuance of show cause notice but it was important that every detection either
results in timely issue of SCN or other appropriate action, as deemed fit by the
competent authority. In this regard, it was stated that the Board was consulting field
formations on the extant monitoring mechanisms and based on feedback, would take
the appropriate action.
New Delhi
Dated :
(SUBIR MALLICK)
Principal Director
(Central Excise and Service Tax)
Countersigned
New Delhi
Dated :
(VINOD RAI)
Comptroller and Auditor General of India
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Note:
This write up has been prepared by Kanpur Regional Training Institute
of NACEN for training purpose of Departmental officers. This may not be a
perfect write up and there is scope to improve it further. If you have any
suggestions
in
this
regard,
you
are
requested
to
send
your
suggestions/comments/feedback to email address: goyalcp@hotmail.com or
rtinacenkanpur@yahoo.co.in
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Concept of Call Book in Indirect Taxes
Take the following Quiz
&
Test your knowledge
Identify the most appropriate choices by choosing the correct option out
of four options given below.
Q.No.1: Call book cases are those cases, (a)
(b)
(c)
(d)
which are pending before CESTAT:
which are pending before Advance Ruling Authority;
which cannot be adjudicated on account of specified reasons
prescribed by CBEC vide Circular No. 162/73/95-CX, dated
14.12.1995;
which cannot be adjudicated for want of Relied Upon Documents.
Q.No.2: What are the cases, which can be transferred to call book?
(a)
(b)
(c)
(d)
Cases admitted & pending before Settlement Commission.
Provisional assessment cases
Cases returned by CESTAT for de novo adjudication;
Cases pending for want of Test Report.
Q.No.3: A case can be transferred to call book with the approval of
_____.
(a) Commissioner
(b) Additional Commissioner
(c) Chief Commissioner
(d) Deputy Commissioner
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Q.No.4: Call book register is to be reviewed periodically at an
interval of,(a) one year
(b) six months
(c) one month
(d) three months
Q.No.5: Following is not a ground for transfer of case to Call book
category.
(a) Where Department has gone in appeal before the Appropriate
Authority?
(b) Where injunction has been issued by SC/HC.
(c) Case which has been admitted by Settlement Commission
(d) Case of provisional assessment
Q.No.6: Protective SCN is issued to the party when,(a)
(b)
(c)
(d)
Audit para is contested by the Department.
Audit Para has been admitted by the Department.
Audit para is contested by the Party.
Audit Para has been admitted by the Party.
Q.No.7: When Audit Para raised by C &AG office questions the
correctness of Board’s Circular /instruction, then what course of
action should be taken by the Department?
(a)
(b)
(c)
(d)
Immediately bring the same to the notice of Board with a request
to furnish reply to C &AG.
Issue protective SCN and furnish reply to C &AG Office
contesting the Audit Para.
Admit the Audit Para and issue SCN to the party.
Issue SCN to the party and adjudicate the same by confirming the
demand.
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Q.No.8
When Audit Report from C &AG is received in the
Commissionerate, what is course of action to be taken by the
Commissioner?
(a)
(b)
(c)
(d)
Action is to be taken by furnishing reply to the PAC section on
those Audit Paras included in the Audit Report which pertains to
the Commissionerate.
No action is required to be taken by the field formation.
Parss pertaining to other Commissionerates should be examined
and considered for looking for similar problem in the
Commissionerate’s jurisdiction also.
As report on Audit para is given by the Board, therefore, there is
no role for Commissioner in the Audit report.
Which of the above statements are correct?
(a)
(b)
(c )
(d)
Only (a)
Only (c)
Both (a) and (c)
Both (a) and (d)
Q.No.9: Reply to the Audit para included in the Audit report of C
&AG office is given by ____
(a)
(b)
(c)
(d)
the Ministry;
the Commissioner
the Divisional Deputy Commissioner or Assistant Commissioners
the Ministry on the basis of input provided by the Concerned
Commissionerate.
Q.No.10: If any audit objection of C & AG office is not admitted by
the Department, then what is the most appropriate course of action?
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(a)
Protective SCN is issued and Reply is to be given to audit that
objection is not admissible and reasons for the same to be given
in the reply.
(b) Protective SCN is issued and transferred to call book. Reply to
be given to the audit contesting the objection along with reason
thereof.
(c) Protective SCN is issued and may be adjudicated at the earliest.
Reply to be given to audit contesting the objection and
enclosing therewith a copy of Adjudication order passed in the
matter.
(d) Reply to the audit is given contesting the objection alongwith the
ground thereof. Response of the audit is to be awaited before
issuing the protective SCN.
Q.No.11: If on receipt of Audit objection, no action is taken by the
Department resulting in loss of revenue, then in such a situation,
what could be consequence on the officer concerned?
(a)
(b)
(c)
(d)
No action could be taken by the Department against the officer.
Responsibity may be fixed on the officers responsible for loss of
revenue.
Action can only be taken against the officials of the Ministry,
not against the field officers.
Action can only be taken against the junior officers only, not
against the senior officers.
Q.No.12: In cases where audit objection is contested by the
Department and protective SCN is issued by the department, then at
what stage, SCN can be adjudicated?
(a) Immediately after furnishing reply to the Audit.
(b) Six months after furnishing reply to the Audit.
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(c) When LAR has not been converted in SOF and not admitted by
the Department, the SCN issued may by adjudicated after a
period of one year from the date of sending reply to LAR.
(d) We should check the practice on the issue in the various field
formations in the country and then determine the further course
of action.
Q.No.13: SCN transferred to call book can be taken with the
permission of the ____.
(a)
(b)
(c)
(d)
Chief Commissioner
Ministry
C & AG office
Commissioner
Q.No.14 Under what situation, SCN transferred to the call book can
be taken out of call book?
(a)
When the grounds on basis of which a SCN has been transferred
to call book, ceases to exist.
(b) It depends upon the overall pendency position of SCNs in the
Commissionerate.
(c) SCN can be kept in the call book for five years.
(d) SCN, when transferred to call book, cannot be taken out of call
book any point of time.
Q.No.15: Who is required to maintain call book register?
(a)
(b)
(c)
(d)
Ministry
Chief Commissioner
Range officer
Adjudication section of the Commissionerate or Division.
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Answer Key:
1.
[c]
6.
[a]
11.
[b]
2.
[a]
7.
[a]
12.
[c]
3.
[a]
8.
[c]
13.
[d]
4.
[c]
9.
[d]
14.
[a]
5.
[d]
10.
[b]
15.
[d]
***
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