CAG Objection not clear – Customs Reply confusing – report goes to President!
THE CAG is the official fault finder of the Government of India. Extracted below are three paras from the CAG's latest report to the President of India on Customs.
M/s Abxxx and M/s Euxxxx, two EOUs under Pune II Commissionerate, manufacturing cotton yarn from duty free imported raw cotton, cleared ‘cotton waste' (arising out of the production process) in DTA during the period 2005 to 2009 at ‘nil' rate of Central Excise duty under the notification no.23/2003-CE dated 31 March 2003. Since effective basic customs duty and CVD under the notification were ‘nil' for DTA sale, the cotton waste was non excisable in terms of paragraph 6.8 (j) of the FTP 2004-2009. Therefore, duty of Rs. 75.86 lakh was payable on that portion of inputs which was generating the cotton waste.
When we pointed this out (December 2009), the department stated (March 2010) that cotton waste classifiable under Central Excise Tariff Act (CETA), 1985 heading 5202 was excisable and attracted ‘nil' rate of duty. It was also stated that cotton waste could not be considered as non excisable merely because it was not liable for duty as per first schedule of CETA or under some exemption notification. The department's reply is not acceptable. This was a case of DTA sale of goods manufactured by EOU, where BCD and CVD was ‘nil' rendering such goods (‘cotton waste' in this case) as non excisable for payment of duty in terms of aforesaid paragraph 6.8 (j) of the FTP. This was communicated to the department in August 2010, its response had not been received (December 2010).
We reported (October 2010) the matter to the Ministry; its response had not been received (December 2010).
On this somebody made a marginal remark - non excisable - Not clear; Even cus reply part confusing.. please show the DAP file and discuss.
And the report has gone to the President of India with this marginal comment. It is not known whether the DAP file was shown and discussed.
Obviously this is how CAG reports are prepared – objections are not clear and replies are confusing and the poor President, Parliament and Press are to consider these reports as sacrosanct!