TIOL-DDT 67 · the untouched capture
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <b><font color="#0000FF" size="3">TIOL-DDT
67</font><br>
3 3 2005<br>
Thursday</b></font></p>
<p align="center"><font color="#006633" size="2" face="Verdana, Arial, Helvetica, sans-serif">
<b>Assesses beware – Draconian Circular coming!</b></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <b>ONCE</b>
upon a time, not very long ago, Government was perceived to be a model for
ethics and fair play. And this costs pretty lot for the government. The state
has no privilege to lie before courts, fabricate accounts or cheat, though
the other party may be doing all these. Just because you think a Naxalite
has killed some people, you don’t call him to the city centre and shoot
him. However inconvenient it is, the state is expected to be honest, fair
and follow the strict and narrow path of law and if the Government does not
have respect for the laws and the Courts, the system will crumble.<br>
<br>
To boost up revenue, Show Cause Notices are routinely issued and more routinely
confirmed. And then starts the coercive measures to collect these outstanding
dues caused by the most outlandish orders. Let’s take a hypothetical
example. A Show Cause Notice is issued to a small manufacturer whose product
is not excisable. The Adjudicating Authority confirms the notice and demands
a duty of Rs 10 Lakhs and imposes a penalty of Rs 10 Lakhs. This manufacturer
has not seen twenty lakhs of rupees in his life. He was offered a private
settlement with the officer (We are not referring to Settlement Commission,
we are referring to Settlement by Commission), but even that he could not
afford and he was stuck with a demand of twenty lakhs. When he takes the case
in appeal to Tribunal, they ask him to deposit 10 Lakhs, which he can never
organise. Well, the story is not all that hypothetical. <br>
<br>
The department had a practice of waiting till the appeal period is over before
pouncing on the assessee to realise the arrears. Then they changed the law
to say that if Tribunal cannot decide the case within six months the stay
is cancelled (Of course, the Tribunal holds that it can extend the stay.)
Recently we reported a case where a PSU assessee had to approach the High
Court as the department had attached its property, because there was no Commissioner
(Appeals) to hear the assessee’s stay petition. <br>
<br>
The department has very talented officers – after all they got their
jobs after passing one of the toughest competitive examinations in the world.
They can come up with ingenious ways to collect what they think is tax. The
proposed Board Circular is one such masterly brilliant piece of ingenuity
most unbecoming of the Government and if finally issued will cause chaos in
the field. <br>
<br>
The Board wants the field to recover demands prospectively. Let us see the
position through another hypothetical situation. An assessee cuts grass grown
in the factory and sells it. The Central Excise officer feels that duty is
payable on that grass and issues a demand cum notice (cum adjudication order),
which is promptly confirmed for the past five years, say till March 2005 by
the adjudicating authority. The party gets a stay from the appellate authority.
Now the Board says, the stay is in respect of the demand and penalty for the
past period and <b>does not restraint the department from implementing the
order from April 2005!</b> Preposterous, as it may sound, that, according
to the Board, is the law. This means even if he gets a stay, the order can
be put to effect for the future period and there can be no stay for this period.
So from April 2005, when he clears grass, he has to pay duty. Otherwise all
consequences of clearance without payment of duty will befall on him. <br>
<br>
This is the gist of a circular the Board is planning to issue. Thankfully,
they have made it applicable only to stay matters not decided issues. By the
same logic, an issue decided by the Tribunal is only for a past period and
for the subsequent period, the orders of the lower authority will hold!<br>
<br>
If you have any objections or suggestions on the proposed circular, you may
write to the Board. The full text of the Circular is given below for your
ready reference. <br>
<br>
<br>
F.No. 208 /1/2005-CX 6<br>
Government of India<br>
Ministry of Finance<br>
Department of Revenue<br>
Central Board of Excise & Customs<br>
****<br>
Subject :- Central Excise-Prospective implementation of orders relating to
valuation and classification matters or matters having recurring revenue effect
-regarding.<br>
<br>
I am directed to say that certain references have been received from field
formations raising doubts over prospective implementation of the orders relating
to classification, valuation or other matters having recurring revenue implications
when a stay has been granted against recovery by Commissioner (Appeals) or
Tribunal.<br>
<br>
2. In this connection, your attention is invited to first proviso to section
35F of Central Excise Act, 1944. As per this provision, the Commissioner (Appeals)
or the Appellate Tribunal depending on the circumstances of the case, may
dispense with the deposit of duty demanded or penalty levied subject to such
conditions as he or it may impose to safeguard the interests of revenue. Thus,
it may be seen that any stay against the order confirming the demand and/or
levying penalty is only with respect to duty demanded/ penalty levied under
the impugned order. <br>
<br>
3. In view of legal position as explained above, it is clarified that any
stay granted by Commissioner (Appeals) or the Tribunal against recovery of
demand or imposition of penalty in a particular order does not restrain the
department to implement such orders with prospective effect. Such action cannot
be construed as coercive action in terms of Board’s Circulars No. 396/29/98-CX
dated 2.6.1998 and No. 788/21/2004-CX dated 25.5.2004. Necessary action may
be taken accordingly.<br>
<br>
4. Field formations may be informed suitably.<br>
<br>
5. Receipt of the Circular may please be acknowledged.<br>
<br>
6. Hindi version will follow.<br>
<br>
Yours faithfully, </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Neerav Kumar
Mallick<br>
Under Secretary to the Govt. of India<br>
<br>
<b><font color="#006633">Amendment to notifications relating to Rebate and
duty free export clearance</font></b><br>
<br>
The Government has amended Notification Nos. 42 and 43/2001 and 19,20 and
21/2005 CENT to add the Additional duty imposed in the 2005 budget to the
list of duties eligible for the concession. – <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2005/exnt05_015.htm">Notification
No. No.15/2005</a>-Central Excise (N.T.) dated 1.3.2005<br>
<br>
There’s a many a slip between the FM’s speech the notifications
- Software not exempted from new CVD ? See our lead story today. <br>
<br>
<font color="#FF0000"><b>Until tomorrow with more of DDT<br>
<br>
Have a Nice Day<br>
<br>
Mail your comments to</b></font> <b>vijaywrite@taxindiaonline.com </b><br>
<br>
</font> </p>
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