TIOL-DDT 173 · the untouched capture
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <b><font color="#663399" size="3">TIOL-DDT
173</font><br>
05 08 2005<br>
Friday</b></font></p>
<p align="center"><font color="#006633" size="2" face="Verdana, Arial, Helvetica, sans-serif">
<b>Don’t detain export goods for they earn valuable foreign exchange
– Board tells the Field</b></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> 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.<br>
<br>
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. <br>
<br>
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. <br>
<br>
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. <br>
<br>
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! <br>
<br>
[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.]<br>
<br>
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. <br>
<br>
<b>The following is a real story – absolutely no fiction.</b><br>
<br>
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. <br>
<br>
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).<br>
<br>
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. <br>
<br>
<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2005/cuscir05_033.htm">CIRCULAR
NO. 33/2005-CUSTOMS dated the 2nd August, 2005</a></font></p>
<p align="center"><font color="#006633" size="2" face="Verdana, Arial, Helvetica, sans-serif">
<b>Reduce Customs duty on petro products – Parliamentary Committee</b></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> THE Parliamentary
Standing Committee on Petroleum and Natural Gas has recommended reduction
in customs duty on petroleum products, especially petrol and diesel, to five
per cent.<br>
<br>
The Committee noted that the duty levied on products did not actually add
to Government revenues, as product imports were almost nil owing to surplus
refining capacity in the country. Moreover, any differential between the customs
duty on crude and the customs duty on products would increase the effective
tariff protection of the refineries, the Committee said. It also recommended
that the total share of taxes and duties in the retail selling prices of commonly
used fuel, including auto fuels, be kept at reasonably low levels. <br>
<br>
Oil Marketing companies have recorded losses in the first quarter.</font></p>
<p align="center"><font color="#006633" size="2" face="Verdana, Arial, Helvetica, sans-serif">
<b>Unfair Mr Nandy</b></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Tragedies produce
the most unpredictable reactions. While Mumbai is slowly and bravely returning
to normalcy, everyone has an opinion on what went wrong, what should have
been done and what should be done. The most bizarre of these opinions unfortunately
comes from a senior journalist Pritish Nandy. In an article in the Times Of
India, Mr. Nandy wants Mumbaikars to stop paying taxes and to add insult to
injury he invokes the name of the Mahatma. He says that Gandhiji would have
personally led a movement to persuade people not to pay tax to a callous,
indifferent government. Do we pay taxes after judging the Government’s
performance? And if there is such a choice, will anyone pay taxes? Is anyone
happy with the performance of the Government, anywhere? Forget India, will
the citizens of the great countries which our Indian great intellectuals look
up to, pay taxes if they have a choice of doing so after judging the government’s
performance?<br>
<br>
Mr. Nandy’s logic for the tax boycott is that Mumbai pays most of the
taxes. According to him,<br>
<br>
Mumbaikars are India’s biggest, most honest tax-paying community. Every
year, they cough up Rs 58,000 crore as income tax. <br>
<br>
We have no idea who gave that figure to Nandy but as per the Government records,
the total Income Tax collection last year was <b>Rs 48312</b> Crores. His
other objection is that the money that goes from Mumbai vanishes into the
dark holes of UP and Bihar, where vote banks need to be pampered.<br>
<br>
Even in the hey days of ‘Mumbai for Mumbaikars’ there was no demand
of Mumbai’s money only in Mumbai. If Nandy’s logic is accepted,
no money should be spent in Kashmir from which we get hardly any revenue.
And Mumbai does not exist in isolation. Strangely Nandy blames the builders
of Mumbai for the recent calamity and his solution is non payment of taxes.
<br>
<br>
Mr. Nandy, as you party in Mumbai, there is a soldier guarding our borders
in areas where a blade of grass will not grow and from where you don’t
get a paisa of tax. You are able to have a nice time in Mumbai and pay all
the huge taxes, because of that insignificant soldier and millions of other
unknown Indians, who make your life possible. It is really unfortunate that
a senior journalist has called for non-payment of taxes. In any case if anybody
follows the advice of Mr. Nandy he is bound to get into trouble and at that
time may be Mr. Nandy will write another strong piece.<br>
<br>
<b>JAB DESH ME THI DIWALI<br>
WO KHEL RAHE THE HOLI<br>
JAB HUM BAITHE THE GHARO ME<br>
WO JHEL RAHE THE GOLI</b><br>
<br>
<font color="#FF6666"><b>Until Monday with more DDT<br>
<br>
Have a nice weekend. <br>
<br>
Mail your comments to</b></font> <a href="vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com
</a></font> </p>
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