Recovery of Service Tax and Customs Dues not Governed by Draconian Circular
A netizen sent us this mail -
"Sir, while every taxation portal & publication is abuzz with the supposedly foolhardy Circular 967 issued by the CBEC when the sun rose on the Indian sub-continent this New Year and mention of petitions being filed in the High Court seeking to strike down this Circular, I know for sure that the women-powered Board would stand by its decision unless of course they have a change of heart.
That apart, the Circular has been issued under the File number having extension CX.6 and which means it purely relates to Central Excise matters.
For the benefit of readers, I would like to extract the following paragraph 5 from the Board Circular 661/52/2002-CX dated 11.09.2002 (as updated) & titled ‘Work distribution amongst various sections of CBEC". It reads -
"5. CX-6 Section
List of Subject :-
1. Amendments to Central Excise Rules and interpretation thereof (excepting matters relating to Modvat, Cenvat, Proforma Credit and sampling)
2. Procedures relating to Assessment, Internal Audit, Preventive Control, Exports, Licencing and Bonds, Delegation of powers, overtime fees and Budget and pre-Budget day clearances, prosecution, adjudication, Rewards under Central Excise Act and all other matters not covered by CX-8 Section.
3. Amendments to the Basic Excise Manual, the Audit Manual, the Preventive Manual and the S.R.P. Hand book.
4. Policy concerning anti-evasion, prosecution, approval of action plan of Directorate General of Central Excise Intelligence, submission of periodical reports and returns concerning preventive work etc.
5. All complaints, representations and Parliament Questions relating to the above items of work."
My conclusion is also supported by the paragraph 4 of the Circular 967 which mentions -
"4) Instructions in CBEC's Excise Manual of Supplementary instructions on the above subject or any other circular, instruction or letter contrary to this circular stand amended accordingly."
I would like to place emphasis on this word "EXCISE" because it would mean that the Circular does not apply to "CUSTOMS" although there is in existence a Manual brought out by CBEC catering to Customs also but the Board has chosen to ignore this fact.
Now, this would leave us with "Service Tax" and to this my answer would be - Service Tax Circulars are issued with the extension "ST" and which is not the case here.
So, for the moment, the New Year Circular would be applicable only to Central Excise matters, where the recovery is envisaged in terms of section 11 of the CEA, 1944.
For recovery of Customs & Service Tax dues, the Board may come out with another Circular after reading this note of mine, I presume!"