TIOL-DDT 2882 · the untouched capture
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=26988"><img src="http://www.taxindiaonline.com/RC2/image/stories/limca_book2016.jpg" alt="DDT in Limca Book of Records - Third Time in a row" width="252" height="220" hspace="5" border="0" align="right" ></a><strong><font color="#663399" size="3">TIOL-DDT 2882</font><br> 05 07 2016 <br> Tuesday </strong></font></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600"><a></a>Recovery of Demands - CBEC Withdraws Draconian Circular - After ‘Draconity' Diminished </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ON</strong> 1.1.2013, as a new year gift to the unsuspecting assessees of indirect taxes, the CBEC unleashed a draconian circular. The Circular No. <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2013/excircular967.htm" target="_blank">967/01/2013-CX</a>, dated, January 01, 2013<em> inter alia</em> stipulated that: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. If a stay application is filed before the Commissioner (Appeals) and CESTAT and if there is no stay within 30 days, recovery action has to be initiated. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. In case of stay applications before High Courts and Supreme Court, even this 30 days time is not available. Recovery has to be initiated immediately after the orders if there is no stay. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. If Commissioner (Appeals) confirms demand in the Order in original, recovery has to be initiated immediately </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board then withdrew seven circulars on this subject issued from 1988 to 2004. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTY2NTI=" target="_blank"><strong>DDT 2015 02 01 2013</strong></a>, I wrote,</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>The Circular issued by the Board lacks foresight, proper understanding of the real situation and shows utter lack of respect for established procedure and the judicial system in the country. This Circular will no doubt create lot of work for the High Courts, as many Writ Petitions will be filed against this atrocious Circular. </em></font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Certainly, this is not the way to treat the goose that lays golden eggs for the department. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Before causing damage to the industry and embarrassment to itself, the Board should immediately do proper introspection and <strong>withdraw</strong> <strong>this draconian Circular</strong>. </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board has indeed withdrawn this draconian circular - after more than three years and unwanted litigation in several High Courts and the Supreme Court, where the department lost with consistent regularity. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In <strong><a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTY3ODI=" target="_blank">DDT 2027 18.01.2013</a></strong>, I asked, "Do we need all this drama to collect taxes? Are we dealing with thugs and thieves? - even they are treated with more respect"</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTY4MDc=" target="_blank"><strong>DDT 2029 22.01.2013</strong></a><strong>,</strong> mentioned, </font></p> <blockquote> <p align="left"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600">Who has benefitted from this Draconian Circular? </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN </strong>the Andhra Pradesh High Court alone, about 50 writ petitions have been filed against this Circular and the threatened recovery, and many more writs are on their way. A consultant who is not even a lawyer told me, “the Board has given a new year gift; I am hiring lawyers to file writs on behalf of my clients and making some good money - unexpected windfall!” Some lawyers have already earned a few lakhs of rupees without even opening their mouths in the Courts. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Even the Standing Counsels of the CBEC are doing fine. They have all become rich suddenly. A rough estimate shows that the CBEC must be spending about Rs. 60 Crores to defend these writs and the assessees must be spending around Rs. 300 Crores. This Circular has generated 360 Crores of business - and with the Government not getting a single paisa! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board should seriously consider withdrawing this Circular immediately to end this farce gracefully before it is struck down by a Court . </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTY4NTU=" target="_blank">DDT 2033 29.01.2013</a></strong> observed,</font></p> <p align="left"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600">Draconian Circular - Departmental Officers don High Court's Role </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> is not lawyers alone that benefitted from CBEC's New Year Circular on arrears recovery. Immediately after the circular was issued, the Departmental officers started sending letter missiles to the assessees threatening attachment and sale if the demands of duty were not paid up immediately. Worried assessees are running around Central Excise officers and those of consultants. The department does not really have the machinery to attach and sell the property of every assessee. So there is an element of discretion --- and the consequential benefits. It seems that this circular is a bundle of opportunity to make money for some Central Excise Officers. Already bribes are being demanded for not giving the attachment notices and not enforcing them and many such officers are grateful to the Board for the benevolent circular. The plea is that you have to spend a couple of lakhs to pursue the matter in the High Court - instead of paying the lawyers, pay us - we will give you a stay that the High Court gives. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Not a paisa to the State but there are several beneficiaries! </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The virus of the Circular created so much damage that CESTAT Bangalore issued a Suo Moto order virtually striking down the circular. (<strong><a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTc0Mjg=" target="_blank">DDT 2078 04.04.2013</a></strong>)</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#FFFF00" span="span">This draconian circular which caused so much of litigation and wasted huge amounts of money and time was highlighted by the Board as a trade facilitation measure in the ministry's annual report for 2013-14 . (<strong><a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MjEyNTA=" target="_blank">DDT 2416 13.08.2014</a></strong>) </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">With the advent of mandatory pre-deposit with effect from 6.8.2014, this draconian circular lost much of its 'draconity' at least for the post 6.8.2014 period. In Circular No. 984/08/2014-CX dated 16.09.2014, Board had clarified that the draconian circular would not apply to cases where appeal is filed after the enactment of the amended Section 35F of the Central Excise Act, that is 6.8.2014. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is but a small example of the humongous damage that a simple circular from the Board can cause with absolute impunity. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Our <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=17376" target="_blank"><strong>CobWeb 337 on 28.03.2013</strong> </a>observed, <em>"the Circular 967 may look villainous but it also helped expose the festering malady of the system.</em>"</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But things are changing - for the better; concepts like ‘ease of doing businesses' are seriously considered. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">BOARD HAS WITHDRAWN THE DRACONIAN CIRCULAR. And issued a new Circular - in tune with the latest policy. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The New Circular stipulates that:</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. In cases where stay application is pending before Commissioner (Appeals) or CESTAT for periods prior to 06.08.2014, no recovery shall be made during the pendency of the stay application. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. For subsequent period i.e. from 06.08.2014 onwards, instructions contained in Circular No. 984/08/2014-CX dated 16.09.2014 shall continue to be followed. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. When demand is confirmed by CESTAT or High Court & stay is pending before High Court or Supreme Court:As a measure of liberalization and to ensure uniformity of practice, recovery proceeding in relation to an order of High Court or Tribunal confirming demand of duty, may be initiated only after a period of sixty days from the date of order of the Tribunal or High Court, as the case may be, where no stay has been granted by High Court or Supreme Court against the order of Tribunal or High Court, respectively. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">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 to the extent of the conflict. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. Seven circulars which had been rescinded vide Circular No. 967/1/2013-CX dated 01.01.2013 shall continue to remain rescinded. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I would be happy to send the Board a bouquet of the choicest flowers for this great circular, consigning the much maligned draconian circular to the dustbin of history. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MjAxNDg=" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC CIRCULAR NO 1035/23/2016-CX, Dated: July 4, 2016 </font></strong></a></p> <p align="center"><font face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600" size="3"><a name="f1"></a>Rescinded Circulars will remain Rescinded! </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> above Circular clarifies that the seven circulars which had been rescinded vide Circular No. 967/1/2013-CX dated 01.01.2013 shall continue to remain rescinded . Why this clarification? Will the seven rescinded circulars come back to life when the circular which rescinded them is rescinded. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Circular No.<strong> <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2013/excircular967.htm" target="_blank">967/1/2013-CX</a></strong> dated 01.01.2013 rescinded seven Circulars. </em></font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Circular No. <strong><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MjAxNDg=" target="_blank">1035/23/2016-CX</a></strong>, dated 4.7.2016 rescinded Circular No. 967. </font></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Will the seven circulars remain rescinded?</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Whoever drafted this Circular is well aware of the brilliance of the field staff who may raise a question that the seven rescinded circulars would come back to life once the circular rescinding them is rescinded. To avoid such a confusion, this clarification is perhaps given. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is always better to give a clarification than to leave a doubt. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Ms. Rama Devi, an eminent Law drafter (A former Secretary, Legislation; Secretary General, Rajya Sabha, Chief Election Commissioner; CESTAT Member, Karnataka and HP Governor) once told me an interesting incident. When the Bhopal Gas Leak Disaster Act was being drafted, Rajiv Gandhi asked a doubt whether a child in the womb (at the time of disaster) would be eligible for compensation. It was explained that a child in the womb is a legal person. Rama Devi suggested that this should be incorporated in the Bhopal Act; when there is a doubt, it should be clarified instead of leaving it to litigation. So, the Act stipulated that ‘children' included a child in the womb. </font></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600"><a name="f2"></a>Central Excise - warehousing - Bunker Fuels </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NOTIFICATION</strong> No. 17/2004 -CE(NT), dated, 4.9.2004 allows the facility of removal of all excisable goods specified from the factory of production to a warehouse, or from one warehouse to another warehouse without payment of duty. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Bunker fuels for use in ships or vessels, as referred to in Sl. No.65A of the table in the notification No. 12/2012-Central Excise, dated the 17th March, 2012, are now included in the list of specified goods. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/ent.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 31/2016-Central Excise (N.T.), Dated: July 4, 2016</font></strong></a></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Tomorrow is a Holiday</font></p> <p align="justify"><font size="5"><strong><font color="#663399" face="Verdana, Arial, Helvetica, sans-serif">Ramadan-Eid Mubarak</font></strong></font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until day after tomorrow with more<strong> DDT</strong></font></p> <p align="justify"><strong><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice Day.</font></strong></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="mailto:vijaywrite@tiol.in" target="_blank"><strong>vijaywrite@tiol.in</strong></a></font></p> </body> </html>