Don’t detain export goods for they earn valuable foreign exchange – Board tells the Field
Business sense seems to have at last dawned on the mighty portals of the CBEC. It has come to the notice of the Board that sometimes goods presented for export are seized for mis-declaration of quantity, quality etc,. These goods are not allowed to be exported even provisionally and adjudication proceedings takes years and meanwhile the goods deteriorate losing value while demurrage has to be paid and finally these goods congest the ports and ICDs.
Board now realizes that this course benefits neither the exporter nor the department. On the other hand if the goods are allowed to be exported, the country would earn valuable foreign exchange and the exporter would get the appropriate price for goods.
In a rare but praiseworthy display of sound fiscal acumen, Board instructs that the seized goods should be released provisionally and allowed to be exported on execution of a bond for an amount equivalent to the value of seized goods and probable fine and penalty which might be imposed.
While on this, it will be a worthwhile exercise for the Board to draw up a list of such unproductive and patently anti national activities the department casually indulges in and order rectification.
While passing adjudication orders, the officers have no fiscal sense or understand business realities. They just look into sections of the Act and merrily go on demanding duty and penalty under the various sections. They never bother to check whether these future arrears can ever be realized. These officers create unrealisable arrears and then the Government will create posts of Commissioners to recover these arrears!
[While on arrears, it is reported that the arrears collection for the last year showed a remarkable increase of 272% from Rs 711 crore in the previous year to Rs 2,642 crore. How? The Indian Reporting Service at its best! Pre deposit before appeal is shown as arrears recovery. Most of it will be refunded. Default of monthly payment of duty is shown as arrears and when the assessees pay the duty it is shown as recovery. Sometimes the assessees are forced to default so that arrears recovery target can be met.]
Even if a dead unit is resurrected, the department will use all its force to bury it. Take for example a defunct unit (defunct due to excessive and illegal demands) which is taken over or purchased by a new owner. Somebody comes to invest time and money in making those machines run again and bring a little cheer to hundreds of hungry human beings by providing them with jobs and he also promises to pay good amounts of excise duty month after month. If the department has any commercial sense it would welcome the new investor and go all out to help him. But the fact is he will not be given a registration unless he gives an undertaking to discharge all the dues of the defunct dead company! – Even if had purchased the unit from the State Finance Corporation which had taken over the assets of the unit.
The following is a real story – absolutely no fiction.
Central Excise officers raided a factory and seized a machine. As usual the machine was left in the factory and in course of time, the unit became defunct. After a few years the Commissioner confiscated the machine and imposed a redemption fine of Rs. 5 Lakhs. The order was not served on the party as he was not available. And the department never bothered to take possession of the machine that was confiscated. In due course, the Finance Corporation took over the entire unit and auctioned it off, including our confiscated machine. The successful bidder was told that he is getting the factory without any encumbrances and that the SFC had become the sole owner and it could sell without any liabilities following to the buyer. This new buyer goes to Central Excise for a registration. He is told that that he can get it only if he pays the redemption fine on the confiscated machine, sold to him by SFC.
There are several such cases. Any effort to revive a sick unit so that people get jobs and Government gets revenue is thwarted in the name of protecting revenue. The point is should you stop possible present and future revenue for the sake of some disputed un-recoverable arrears? Will any sensible businessman lose present business for past opinions? But the business of Government is not about business – it’s about power (and its misuse); it’s about Rules (and their abuse).
In such a situation, the Board’s circular comes as a whiff of fresh air of sound economic sense. Can any one imagine that export goods will be allowed to languish in our ports instead of reaching their foreign destinations and bringing us precious foreign exchange? But such things did happen and Board directs that they should not. Well Done CBEC and thank you for not keeping this circular a state secret.
CIRCULAR NO. dated the 2nd August, 2005