Settlement Commission to be Pulled Back Soon: FM in Budget 2025

Finance Minister Nirmala Sitharaman has announced the withdrawal of the Customs Central Excise Settlement Commission as part of the Union Budget 2025 presented before the Parliament on February 1st, 2025, at 11:00 AM. The Finance Bill 2025 introduces substantial changes to the Commission, aiming to streamline the settlement process and provide a more efficient mechanism for handling pending applications.

The Customs & Central Excise Settlement Commission, established under Section 32 of the Central Excise Act 1944, will cease operations on April 1, 2025. This Commission was created to expedite the resolution of disputed Customs and Excise duties, offering taxpayers a chance to settle their dues and promoting transparency and compliance. Its core purpose was to provide a forum for taxpayers to resolve cases, avoiding lengthy and expensive litigation, and to encourage those who may have evaded duty payments to rectify their situations.

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The Customs & Central Excise Settlement Commission will be replaced by a new body. Starting on April 1, 2025, to ensure a smooth transition and maintain the continuity of dispute resolution processes, the Interim Board for Settlement is being established. The Central Government will establish one or more Interim Boards for Settlement, as necessary.

This new entity will assume responsibility for all pending applications that were previously under the purview of the Customs & Central Excise Settlement Commission.

The Interim Boards for Settlement, tasked with the crucial responsibility of resolving pending disputes, will be composed of three esteemed members. Each of these members will hold therank of Chief Commissioner or higher within the Central Board of Indirect Taxes and Customs (CBIC), ensuring a high level of expertise and experience within the board. These members will be carefully nominated by the CBIC, to ensure smooth and decisive operations, and a clear mechanism for decision-making has been established.

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In situations where the three members of an Interim Board find themselves in disagreement on a particular matter, the resolution will be determined by a simple majority vote, ensuringthat decisions are reached efficiently and fairly, preventing potential gridlock.

Furthermore, recognizing the complexities of the cases that the Interim Boards will handle, the CBIC will also provide crucial support staff. Designated Central Excise Officers, possessing the necessary expertise and knowledge, will be nominated by the CBIC to assist the Interim Boards. This comprehensive structure, with experienced members, a clear decision-making process, and dedicated support staff, aims to ensure the Interim Boards operate effectively and efficiently.

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The interim Board will have the option to extend the deadline for resolving pending applications. Within three months of being established, the Board can extend this deadline by up to twelve months from its formation. Any such extension must be justified in writing, ensuring a transparent and accountable process.

The transition from the Customs & Central Excise Settlement Commission to the Interim Board for Settlement aims to modernize and streamline dispute resolution. This shift promises a more efficient and transparent system for taxpayers, ensuring continued access to a fair process for resolving excise-related matters.

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