TIOL-DDT 495 · the untouched capture
Rendered as it looked. Links and images are disabled in this view; the file itself is untouched.
<html>
<head>
<meta http-equiv=Content-Type content="text/html; charset=windows-1252">
<title>Taxindiaonline's DDT 402</title>
</head>
<body>
<p><b><font color="#663399" size="3" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT
495</font></b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><br>
21 11 2006<br>
Tuesday</b></font></p>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Physical
control for errant assessees?</font></strong><font color="#006600"><strong>
Board’s new initiative – a revenue drive?</strong></font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">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:-</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1.
The Commissioner <b>personally</b> meets the assessees to request them to
pay more in PLA.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2.
Preventive parties hover around factories.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3.
Cenvat credit is frozen. Earlier the records used to be taken over by the
Central Excise officers.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4.
Threaten with dire consequences if the assessees do not pay up.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5.
Beg the assesses to pay a little more.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6.
Make the assessees pay for goods which are yet to be manufactured.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7.
Make the assessees to pay up huge amounts in March which are refunded in April.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">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.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9.
Once the targets are artificially and illegally hit, celebrate with gusto.
</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">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!</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>December
is here and Revenue is bound to be crazy:</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">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.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">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.</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">i)
Removal of goods without documents and without payment of duty</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">ii)
Undervaluation of goods where portion of sale proceeds, in excess of the invoice
price, is received separately and remains unaccounted.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">iii)
Taking of CENVAT credit without receipt of goods specified in the document</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">iv)
Taking of CENVAT credit on invoices which are not genuine</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">v)
Issue of excise invoice without delivery of goods (by a manufacturer or a
dealer)</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">vi)
Claiming of refund or rebate based on invoices which are not genuine</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Almost
every assessee can be accused of the above violations.</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>And the
punishment?</b>Board proposes to impose the following measure on the erring
tax payers.</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1.
Withdrawal of facilities of monthly payment of duties for a specified period.
</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2.
Non-utilization of CENVAT credit for a specified period.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3.
Withdrawal of the facility of disbursement of 80% refund/rebate on provisional
basis within 15 days of filing of claim.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4.
After detection of second case, the manufacturing unit would be placed under
physical control.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5.
Suspension of registration of the dealer for a specified period.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6.
Withdrawal of self sealing facility of export consignments.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Will the
specific period coincide with the last quarter of the year when there is a mad
drive revenue?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Bureaucracy
at work – the procedure</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Mercifully
the Board has wound itself in so much of bureaucratic maze that its plan cannot
be implemented in the next couple of years. </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1.
The decision to impose the restriction will be taken by the Member (Excise),
Central Board of Excise & Customs.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2.
The proposal has to be sent by the Chief Commissioner.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3.
The Chief Commissioner has to examine the proposal after giving an opportunity
to the assessee to present his case.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4.
He has to recommend the specific facility proposed to be withdrawn and the
period. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5.
As the order of withdrawal is administrative in nature, there will be no appeal
remedy.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Is the
Board above the Supreme Court of India?</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">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? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is
only a proposed circular. You can send your comments to <a href="mailto:hema.priya@nic.in">hema.priya@nic.in</a>.
</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We will
bring you more comments on the issue in the next few days.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/cxdraft.htm">Board’s
draft circular in F.No. 224/40/2006 – CX 6</a></font></p>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Euros
in post parcel - Aishwarya Rai cleared?</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs
officers quizzed glamour queen Aishwarya Rai yesterday and reported to have
given her a clean chit at least as of now. There was no clue as to who sent
her the money, which the Customs has to now investigate. It seems Aishwarya
was interrogated in the airport instead of the Custom House. This has created
a controversy. Can the summoned person have the choice of the place where he/she
is going to be questioned? Long ago a Commissioner summoned ITC chairman Deveshwar
to a remote small town, not connected by air. His request for hearing in a nearby
city was not considered. Coming back to Aishwarya, was she shown any special
consideration? No, says Customs officers – “after all in the airport also there
is a customs office and we did not go to her house to record her statement”
– is their view, while her advocate believes that she should not have been summoned
in the first place!</font></p>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">Nothing
simple is ever easy and nothing free is ever cheap. And nothing simple is ever
simple.</font></b></font></p>
<p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until tomorrow
with more DDT </font></p>
<p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice
day. </font></p>
<p><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@taxindiaonline.com">vijaywrite@taxindiaonline.com</a></font></p>
</body>
</html>