TIOL-DDT 112 · the untouched capture
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<b><font color="#0000FF" size="3">TIOL-DDT 112</font><br>
11 05 2005<br>
Wednesday</b></font></p>
<p align="center"><b><font color="#336633" size="2" face="Verdana, Arial, Helvetica, sans-serif">
The Audit Tour</font></b></p>
<p><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> DDT </font></b><font size="2" face="Verdana, Arial, Helvetica, sans-serif">continues
with Audit<b>.</b></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <b>Transfer
of credit on change in ownership</b>:- The Cenvat Credit Rules and the earlier
versions allow transfer of credit balance, when a unit is taken over,
sold, amalgamated etc,. The rule nowhere specifies that credit should be allowed
only proportionate to the stocks available. But AG doesn’t think so.
Essar Steels of Vizag was taken over by Hy-Grade Pellets and an amount of
about 40 Lakhs of Modvat credit balance was transferred. AG feels only about
6 Lakhs corresponding to the available stocks should have been allowed to
be transferred. The department replied that the rule did not restrict or limit
the quantum of credit to the extent of inputs in stock or inputs in process
available on the date of transfer.<br>
<br>
AG said, “Nothing doing”. His wisdom is,<br>
<br>
<i>Reply of the Ministry is not tenable since the relevant provisions, inter-alia,
imposed a specific condition in regard to accountal of inputs/capital goods
on which credit was availed of by the transferee. Transfer of balances was
therefore, required to be restricted only to the extent of inputs in stock/in
process actually available on the date of transfer of management and which
were eventually accounted for by the transferee.</i><br>
<br>
The Tribunal had in AAR AAY PRODUCTS PVT. LTD. V COMMISSIONER OF CENTRAL EXCISE,
NEW DELHI - 2003 (157) E.L.T. 40 (Tri. - Del.) held that transfer of credit
should be allowed even if there were no inputs available in balance to be
transferred. But what is a mere Tribunal before the mighty wisdom of
AG? The AG wants to allow credit only in relation to the stock of inputs physically
available. Just imagine a reverse situation. The credit balance available
is only Rs. 100/-. But the balance of stock available corresponds to Rs. 10
Lakhs credit. Will Rs. 100 credit be transferred or Rs. 10 Lakhs? No logic
with the AG.<br>
<br>
<b><font color="#006633">Customs</font></b></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A few interesting
bits from the CAG’s report on Customs.<br>
<br>
• <b>What happens to the Customs duties?</b> Duty foregone under export
promotion schemes has gone up from 43 per cent of customs duty receipts in
2000-2001 to 82 per cent of customs receipts in 2003-2004.<br>
<br>
• <b>Cost of collection is 1%</b> - As in excise, AG has no objection
to the low cost of collection.<br>
<br>
• <b>Customs revenue of Rs 2400 crore remained unprotected against risk
of loss, pilferage etc. due to non/deficient execution of bond/bank guarantee
(BG) by custodians for storage of import cargo, by carriers for transhipment
of export cargo, non renewal of BG, and insufficient insurance coverage of
goods at ICD/container freight station (CFS).</b><br>
<br>
• <b>Delay in disposal of unclaimed/un-cleared and confiscated goods
and injudicious decision of custodian caused loss of Rs 2.96 crore.</b><br>
<br>
• <b>Confiscated goods – rent – 12.41 Crores; sale proceeds
– 1.20 crores – Customs officers are no good businessmen.</b>
- Non-disposal of confiscated goods is a dual liability of Government, on
the one hand rent is incurred, on the other quality deterioration leaves little
scope of realisation of appropriate revenue. Audit scrutiny of records of
four ICDs in four Commissionerates revealed that against the rent liability
of Rs.12.41 crore the Department could realise only Rs.1.20 crore as sale
proceeds of confiscated goods. This resulted in loss of revenue to the extent
of Rs.11.21 crore.<br>
<br>
• <b>Injudicious expenditure on furniture</b> - Board’s circular
dated 14 December 1995, stipulated that the custodian would provide free furnished
office space at each ICD for departmental officers. It was, however, noticed
that contrary to the above instructions, the Department incurred expenditure
of Rs.11.27 lakh at ICD, TKD (Delhi) during 2000-01 to 2002-03 on purchase
of furniture from their own budget, which was not claimed from custodian.
Similarly, in Bangalore Commissionerate the Department incurred expenditure
of Rs. 5.70 lakh on electrification and furnishings in ICD without claiming
it from custodian.<br>
<br>
<font color="#006633"><b>Vishesh Krishi Upaj Yojana – Customs exemption</b></font><br>
<br>
Government has issued an exemption notification to allow duty free imports
under the Vishesh Krishi Upaj Yojana (Special Agricultural Produce Scheme)
- <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2005/ctariff05_041.htm">Notification
No. 41/2005-Cus., dated 9-5-2005</a></strong><br>
<br>
<font color="#FF6666"><b>Until Tomorrow with more DDT and CAG<br>
<br>
Have a Nice weekend.<br>
<br>
Mail your comments to</b></font><b> vijaywrite@taxindiaonline.com </b></font>
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