CAG Recommendations
CUSTOMS: CAG has recommended,
++ The department must implement the ICES in DPCC to mitigate the risk of undervaluation and overvaluation of these sensitive commodities.
++ Prescription of norms for physical examination of goods cleared by the SEZ units adhering to the RBI requirements and to prevent any loss of revenue
++ Ambiguity in the notification may be clarified so that ‘gold coins' can be classified as a unique item subjected to a specified rate of duty.
++ Government should introduce a provision in the SEZ rules to consider sales by DTA units to SEZ units, on foreign exchange payments, as ‘imports' by SEZ units for the purpose of calculating NFE.
++ Government may consider introducing a suitable provision in the SEZ rules to prescribe a minimum value addition by the SEZ units to bring them at par with the EOUs, thereby providing a level playing field.
++ The department should institute a suitable control mechanism to get assurance on the reliability of the data furnished in APRs and ensure their timely submission.
EXCISE
++ The Government may consider amending the Act and the Rules to have a uniform system for assessment of medicines irrespective of their being cleared as physician samples or for trade.
++ To check against undervaluation of ayurvedic and homeopathic medicines and consequent revenue loss, the Government needs to bring these commodities under MRP based assessment (section 4A)
++ The Government may ascertain the reasons for increasing incidence of duty payment by cenvat credit, take necessary corrective action and use cenvat to PLA ratio as a risk factor based on which internal audit/ investigation may be undertaken.
++ The Government may rationalise the present rates of abatement based on the various changes that have taken place in the rates of taxes.
++ The Government may amend the enabling Rules, to levy duty on products cleared free of duty under the guise of quantity discount, bonus scheme, etc. but which have MRPs printed and are sold in the market at MRP and are otherwise assessed under MRP based (section 4A) assessments.
++ Penal provisions should be included in the Drugs (Prices Control) Order, 1995 to ensure that the manufacturers of pharmaceutical products pass on the benefits of duty reduction to the consumers.
++ The Government may monitor the pendency of adjudication cases, e specially cases pending for more than five years and issue instructions to commissionerates to investigate the reasons for such long pendency.
++ The Government may consider integrating the excise and service tax returns to mitigate the risk of evasion of duties/tax more so as the environment of all tax administration is becoming e-enabled, especially post introduction of ACES (Automation of Central Excise and Service Tax)
++ The NPPA should review all cases of prices of pharmaceutical products where MAPE was required to be restricted to the prescribed cap and recover the excess amount charged by the manufacturers of such pharmaceutical products.
CAG = Comptroller and Auditor General of India
SVB = Special Valuation Branch
DPCC = Diamond Plaza Customs Clearance Centre
NPPA = National Pharmaceutical Pricing Authority
MAPE = Maximum Allowable Post Manufacturing Expense
Source: CAG Reports 11 and 15 of 2010-11.