Physical control for errant assessees? Board’s new initiative – a revenue drive?
The excise department is known to go crazy during December – March, when they find it difficult to meet their targets. The field uses different methods to boost up revenue like:-
1. The Commissioner personally meets the assessees to request them to pay more in PLA.
2. Preventive parties hover around factories.
3. Cenvat credit is frozen. Earlier the records used to be taken over by the Central Excise officers.
4. Threaten with dire consequences if the assessees do not pay up.
5. Beg the assesses to pay a little more.
6. Make the assessees pay for goods which are yet to be manufactured.
7. Make the assessees to pay up huge amounts in March which are refunded in April.
8. Hold series of meetings in which stupid issues like weather, WTO, National Economy and their relevance to higher cenvat credit are discussed and finally concluded that targets are to be met by hook or crook.
9. Once the targets are artificially and illegally hit, celebrate with gusto.
There was a Commissioner who proudly wrote to the Board that he along with his dedicated team has with great difficulty achieved more than the revenue target and this was largely because of the nice Commissioner (Appeals) who had been passing exceptionally great orders only in favour of revenue. The Board fairly wrote back that there should be more objectivity and the Commissioner (Appeals) is not there to pass orders in favour of revenue. Even if he does, it is not to be publicly appreciated!
December is here and Revenue is bound to be crazy:
CBEC proposes some hard measures to discipline the truant assessees. And one of the measures is to bring in physical control. Remember physical control? This archaic system had an inspector in the factory round the clock supervising every activity. Excisable goods had to leave the factory only under his supervision. Did physical control in any way reduce evasion? It only promoted corruption. Several officers faced charges and many were punished. Charge sheets for officers working in physical control units were almost 100%. If the Board thinks that it can set right things by physical control, it is living in the eighteenth century.
Board feels that the simplified procedures have not really resulted in expected rise in compliance levels and so the Board wants to take disciplinary action against erring assessees. The following categories are identified for special treatment.
i) Removal of goods without documents and without payment of duty
ii) Undervaluation of goods where portion of sale proceeds, in excess of the invoice price, is received separately and remains unaccounted.
iii) Taking of CENVAT credit without receipt of goods specified in the document
iv) Taking of CENVAT credit on invoices which are not genuine
v) Issue of excise invoice without delivery of goods (by a manufacturer or a dealer)
vi) Claiming of refund or rebate based on invoices which are not genuine
Almost every assessee can be accused of the above violations.
And the punishment?Board proposes to impose the following measure on the erring tax payers.
1. Withdrawal of facilities of monthly payment of duties for a specified period.
2. Non-utilization of CENVAT credit for a specified period.
3. Withdrawal of the facility of disbursement of 80% refund/rebate on provisional basis within 15 days of filing of claim.
4. After detection of second case, the manufacturing unit would be placed under physical control.
5. Suspension of registration of the dealer for a specified period.
6. Withdrawal of self sealing facility of export consignments.
Will the specific period coincide with the last quarter of the year when there is a mad drive revenue?
Bureaucracy at work – the procedure
Mercifully the Board has wound itself in so much of bureaucratic maze that its plan cannot be implemented in the next couple of years.
1. The decision to impose the restriction will be taken by the Member (Excise), Central Board of Excise & Customs.
2. The proposal has to be sent by the Chief Commissioner.
3. The Chief Commissioner has to examine the proposal after giving an opportunity to the assessee to present his case.
4. He has to recommend the specific facility proposed to be withdrawn and the period.
5. As the order of withdrawal is administrative in nature, there will be no appeal remedy.
Is the Board above the Supreme Court of India?
What makes the Board believe that these retrograde actions against the assessees are administrative actions? Are the assessees employees of the Board? And why administrative actions cannot be appealed against? High Courts are now going to be flooded with writ petitions. Every time the consultants fear a threat to their profession, the good government comes with schemes to provide opportunities for them to flourish. There are already enough draconian provisions in the law to punish the evaders. Then is it worth the trouble for the Board to launch such un-friendly schemes? And is it practical? There are some 25 Chief Commissioners and if each one of them sends in five proposals, the Board Member will have to decide a hundred cases. How much time is going to be wasted in all this exercise? And most probably the orders will be stayed by the High Courts. Will this result in any addition to revenue or more litigation?
This is only a proposed circular. You can send your comments to hema.priya@nic.in.
We will bring you more comments on the issue in the next few days.
Board’s draft circular in F.No. 6