In tandem with the Chelliah Committee, which worked to rationalize the tariff structure, the Rekhi Committee was established in 1992 by the government to build an integrated indirect tax code. Chaired by K. L. Rekhi, Former Chairman, Central Board of Excise & Customs, members included Ravinder Narain (Advocate); Subhash N. Parikh (Advocate); L. P. Asthana (former Collector of Customs & Central Excise); and T. S. Sundaram (Deputy Secretary General, PHD Chamber of Commerce and Industry and Member-Secretary). The committee was required to (i) develop a common code of indirect taxes by incorporating the provisions of the Customs Act of 1962, the Central Excises and Salt Act of 1944, and any other related provisions and (ii) simplify and streamline the existing laws and procedures. The excise-duty structure prior to the 1990s comprised several rates and a number of exceptions. It was often difficult to identify the rate applicable to a commodity because the rates depended on numerous factors, such as the manufacturing process, the inputs used, the final use of the product, and the amount of power consumed.

To study these problems, the committee consulted a wide range of stakeholders from industry, trade, and government. It encountered two views. The first was skeptical of creating a common code for customs and central excise duties, as the provisions of the aforementioned laws were too difficult to reconcile. The second, more receptive view was held by those who pointed to areas of overlap and stated that the Customs Act could serve as the base on which these commonalities could be integrated. Both kinds of taxes were levied on commodities and administered by the Revenue Department and Board in the Ministry of Finance.

In its report, the Rekhi Committee emphasized the importance of tax management for the success of the larger tax-structure reforms. It decided to create a unified code that combined all common provisions, and it included separately drafted rules for areas in which integration was not possible. It recommended establishing a tribunal to adjudicate between taxpayers and collectors, setting up a high-level All India Classification Committee comprising trade and industry representatives, clearing import consignments within three days of filing of bill of entry, supplementing each state’s monopolistic nominated bank by another bank, and removing coercive collection practices in cases in which a stay application had been filed over a disputed duty amount.

The Rekhi Committee aimed to streamline and unify indirect tax laws by proposing a common code for customs and excise duties, simplifying procedures, and enhancing tax management. Its recommendations sought to improve clarity, efficiency, and fairness in the administration of indirect taxes.