Central Excise Tariff Conference - What the CBEC didn't tell us
CBEC had circulated the decisions taken in the recent Tariff Conference of Chief Commissioners. (Please see DDTs 2741, 2742, 2743, 2744, 2745, 2746). There were some other issues which the Conference discussed but were not circulated to the trade and public. DDT brings you some of those issues.
Counter-productive Year-end Revenue Drives - No more coercion?
As the new year arrives, assessees who are used to routine and regular harassment by the Department in the name of meeting their revenue targets, can hopefully heave a sigh of relief.
In the Conference, the Chandigarh Central Excise Zone proposed,
Towards the end of almost every financial year, pressure builds up on all field formations to meet revenue targets assigned to them by the Board. Various methods suggested and employed to boost net revenue yields include:
(a) Holding back sanction of refunds/rebate/drawback claims till 31st march
(b) Persuading the assesses not to use Cenvat credit and instead pay duty in cash/PLA
The whole exercise benefits none, in fact, it offends the taxpayers, compounds the ease of doing business, and provokes resentment from the trade, without securing any real gain to the Government. Luckily, the current times are most opportune, when the revenue growth is good and there may not be any need for such revenue drive.
After discussion the conference concluded that such coercive collection of revenue in the last quarter does not serve the interest of any stake holder and vitiates the working atmosphere. It was decided by the conference that such coercive practices would be avoided.
There seems to be no sound reason why the Board wants to keep such a trade friendly decision a secret. Or is the Board not vey confident that it can avoid the useless, offensive and resentment provoking coercive action to collect a few extra rupees?
Limitation for Demand - Five Years in all cases:
Here is a lurking danger. The Vizag Zone proposed this in the Conference.
The legal provisions for demand of duty under Section 11A of Central Excise Act and Section73 of the Finance Act require that the department establish ‘suppression, willful miss-statement and fraud' to invoke the extended period of 5 years. Such cases entail mandatory equivalent penalty also with certain reductions in the quantum of penalty where the assesse suo-moto pays duty, interest and penalty within specified time frame. The conference may deliberate on the issue of increasing the time frame to raise a demand from the current period of one year in central excise and 18 months in service tax to a period of 5 years without invoking extended period for demand of duty and corresponding penal provisions. The proposal was made as some of the Courts have taken a stand that once audit covers a particular period, no issue can be raised for the said period during the subsequent audit.
The conference discussed the issue in light of the fact that audit of each of the assessee, is not conducted every year and observed,
(a) Often during audit short-payment of duties are noticed where it is difficult to invoke extended period of time.
(b) At the stage of audit, often evidence for invoking extended period is not available. This may lead to loss of revenue as detected short levies may be time-barred and beyond normal period of limitation.
The Conference recommended that Board should consider proposing amendment in law to the effect that in case of audit the normal period of limitation would be much longer say three years or five years.
Cases Pending Prosecution for more than 15 Year Where Amount Involved is Less than 5 Lakhs::
The issue of long running prosecution in petty cases was discussed as in many such cases the accused persons and witnesses go missing, evidence and documents are not available and considerable expenditure is incurred without the possibility of very fruitful results.
The conference discussed the issue and was of the view that it would be desirable that a policy decision was taken on the subject by the Board. Consequently, it was decided that Board would collect information regarding petty cases which are long pending for say more than 15 years and where duty involved is less than Rs. 5 lakh. Policy decision would be taken after due analysis of the data collected.