TIOL-DDT 273 · the untouched capture
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<div align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#996699" size="3">TIOL-DDT
273</font><br>
30 12 2005<br>
Friday</strong></font></div>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs
Tariff - Standard Unit of Quantity - be sure of your product - litres or metres</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>"Two
metres of tea please"</strong> A foreigner on a visit to a South Indian
Village saw a tea maker making tea by pouring the tea from one glass to another
with both his hands at 180 degrees. The foreigner thought that he was measuring
tea, So he came to the shop and asked, "please give me two metres of tea".
</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
Customs Tariff (and the CE tariff) has a set unit of quantity for each heading.
This was of course not given much importance. The Board in its letter in F.
No. 4/7/2005-CX. I, dated 31-3-2005 had observed that as per the <em>Additional
Note No. (3)</em> to the CE Tariff Act “<em>the standard unit of quantity
is specified for each tariff item to facilitate the collection, comparison and
analysis of trade statistics. Thus, standard units of quantity for each tariff
item have been specified to facilitate collection, comparison and analysis of
trade statistics. These units of quantity are indicative and have not been made
mandatory as yet. It would be pertinent to mention here that exactly similar
note exists in the 8-digit Customs Tariff also that is in existence since February
2003. It has been gathered from Cus. IV section that declaration of quantity
in terms of the said ‘units of quantity’ in the bill of entry/shipping
bill has not yet been made mandatory.</em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But
the DG Valuation is not impressed with logic; it is after all the organisation
that has to do the compilation. So the DG informs</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">it
has conducted study of usage of different units of quantity. Use of different
units of quantity for the same goods has been causing serious problems in
data analysis. Very often importers describe the same Unit differently
(number, piece, unit, etc.). Unacceptable units like sacks, cartons,
bundles are often used in respect of certain goods (Plastic granules, Apples,
Carpets etc.). A different kind of units being used for the same goods
is another serious problem (eg. Petroleum quantified oil in Litres, Kilo liters,
Kg, MT, Drums, etc.). Incomprehensible units are used in some cases (
eg. Number in respect of cloves). These practices make it difficult to
do value comparison for such kind of goods. Data analysis and Risk Management
also will run into difficulties due to such inconsistent use of Units of quality.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
DG further informs that</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In
the recent conference of Chief Commissioners presided over by the Member Customs)
CBEC held on 01/10/2005, it was decided that all the Customs stations should
take action to implement the Standard Unit of Quantity prescribed in the Customs
Tariff within a period of three months.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
minutes of the conference reads as,</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It
was noted that the use of different Units of Quantity for the same item was
also creating serious problem both in imports and exports. In fact the
statistics on exports reveal that after the withdrawal of the quota regime the
export figurers show less quantity compared to the previous period, and it was
found to be due to the wrong use of Units of Quantity. The need for Standard
Units of quantity was, therefore, emphasized both for imports and exports. In
this connection it was recalled that the Board had issued a Circular No.51/2002
dated 14.6.2003 regarding the need for following the prescribed units of quantity. But
it has not been implemented strictly by the field formations. It was, therefore,
stressed that the Chief Commissioners concerned should take immediate action
for enforcing the Standard Units of quantity. In many cases although the
Custom House had issued Public Notices in this regard, it was not enforced. There
is a need to have a strict enforcing of Standard Units of Quantity within a
specified time frame for a purposeful application of the NIDB data, particularly
in the context of implementation of the Risk Management Module.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Decision
:- </strong></font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) In
respect of imports, all the Customs stations should take action to implement the
Standard Unit of Quantity prescribed in the Customs Tariff within a period
of three months. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) In
the event of non-compliance by the importers, the assessing officers would
be entitled to raise query and not clear the Bill of Entry till the requirements
of Standard Units of Quantity are complied with. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) In
respect of exports, the date for enforcement will be decided by the Board
in consultation with the Ministry of Commerce.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So
within three months the Board wants the unit of quantity norm to be implemented
and that is by 31st January 2006 and so far nobody knows a thing about this.
Will the Customs seize goods if the correct unit of quantity is not shown in
the Bill of entry? And why is the Board shy of issuing a public circular? Circulars
from the Board and other dignitaries like DGs have been open to severe criticism
especially in these columns and now they have the Ostrich for a model. Instead
of open public circulars, they are issuing secret instructions to the field.
A law that is meant to be known only to the enforcers and not to the ones who
are supposed to obey it is not a good law. To keep instructions secret because
they are open for criticism is simply childish and does not behove well for
the premier revenue collecting agency in the country, especially when we talk
a lot about Right To Information. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Truth
as defence against contempt of court?</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Satyameva
Jyate! Not in Contempt - if you choose to criticize their lordships! The
former CVC, Vittal said, "So far as Judiciary is concerned, the shield
of 1971 Contempt of Court Act protect them. Any attempt at even making objective
criticism runs the risk of person making the comments being hauled up for Contempt
of court. <strong>Truth is no defence against Judiciary</strong>" All this
is going to change with the cabinet approving the amendment to the Contempt
of Courts (Amendment) Bill 2004. Section 13 of the Act is proposed to be changed
to </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“13.
Notwithstanding anything contained in any law for the time being in force,—<br>
(a) no court shall impose a sentence under this Act for a contempt of court
unless it is satisfied that the contempt is of such a nature that it substantially
interferes, or tends substantially to interfere with the due course of justice;<br>
(b) the court may permit, in any proceeding for contempt of court, justification
by truth as a valid defence if it is satisfied that it is in public interest
and the request for invoking the said defence is bona fide.”</font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
<font color="#006600"><strong>Targets in the new LTU Era</strong></font></font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As
the Financial year closes, normally there will be hectic activity at the Commissionerates.
Several reports and brochures analyzing the revenue from various angles are
prepared and submitted to the bosses. Tons of papers and hundreds of man-hours
are spent on this single activity called revenue performance and reaching the
targets. The atmosphere in the revenue meeting will be charged and the senior
officers often try to find out ways and means to satisfy their bosses about
their revenue performance. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But,
is all this going to change from 1st April 2006? LTUs are going to be opened
in the Metros from the next financial year. Under this, the top assesses can
choose to pay tax and file returns at their head offices instead of having multiple
registrations at different locations. So though the manufacture and clearance
takes place in one Commissionerate, the revenue will be realized in another.
</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We
already have Centralised registration for payment of Service Tax under which,
though the service is rendered at different places, the tax payer can choose
to pay at a Central office. As per the statistics, in 2004-05, the five Metros
contributed 64% of the revenue from Service Tax. The remaining Commissionerates
contributed only 36% of the Service Tax revenue. It doesn’t mean that
they are not doing well, but due to Centralised registration at Metros, the
revenue is accounted there though the actual service is rendered elsewhere.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But,
as old habits die hard, the above logic has little impact on our tax administrators
and it is learnt that there are some serious reviews of revenue performance
on service tax front. The targets are fixed for the Commissionerates and the
growth rates are compared vis a vis national growth rates and are seriously
followed. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Coming
back to LTUs, once the manufacturer shifts the payment of duty from a Commissionerate
to a Metro, there may be serious objection from the jurisdictional Commissioners
who are very much concerned about the revenue! ( of course from their Commissionerates).
At any cost they may resist the tax payer from exercising his option to join
the LTU scheme. So there may an inbuilt resistance from the Senior officers
which our FM needs to give attention to and it may not be surprising if at the
end of the day we find not even one from his projected 582 entities join this
mega scheme. </font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
<font color="#990000"><strong>Real charity doesn't care if it's tax-deductible
or not</strong></font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
<font color="#FF6666"><strong>Until Monday with more DDT in the New Year</strong></font></font></p>
<p align="justify"><font color="#FF6666"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Have
a nice Weekend. </font></strong></font></p>
<p align="justify"><font color="#FF6666"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail
your comments to</font></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
<a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com</a></font></p>
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