Why the CBEC exists. In my opinion,
CBEC exists for formulating the Law i.e. rules etc. in accordance with the law
in transparent manner & administer them. However, why this most significant
part of the responsibility should be ignored is very difficult to understand.
This is the series on rebate on exports & it shows that how the system is
manipulated to get away with the wrongs. Some actions are that of outright
cheating.
The issue
of difference between the FOB value of exports & the ARE-1 value has been
precisely settled by the CBEC more than 15 years ago & the same has been
respected by the department since then. The circular has not been modified or
annulled. If the present set of officials has any grouse then they should take
up the matter with the CBEC instead of harassing the exporters in respect of
the claims already settled. Why the officials don’t do it or the CBEC does not
take action suo motto. The CBEC can always consider the issue afresh in light
of the changes in the law from time to time & issue fresh circular to be
followed. This happens all the time when changes in the law are introduced out
of experience & issues settled by the courts in this country. However, once
the circular exists, the department is bound by it & needs to implement the
same. This frivolous exercise of SCN contrary to the CBEC circular needs to be
stopped, which serves no purpose. Why the CBEC permit frivolous litigation
& merely act as a spectator. CBEC vide circular No. Circular No.
203/37/96-CX, dated 26-4-1996 had clarified that it is observed that the AR4
Value should be determined u/s 4 of the Central Excises & Salt Act and the
same should be declared on the invoices issued under Rule 52A. FOB value which
is contracted price in the course of international trade should normally
correspond to Section 14 of the Customs Act, 1962 and this value may be more or
even less than the AR4 value. Therefore, this is clarified that, it is not
necessary that the AR4 Value and the FOB Value should be the same.
To keep the officers away from the customs &
the Central Excise from trampling into each other’s domain, the assessment of
the goods cleared for export is done by the two wings of the CBEC under two
different sets of laws i.e. The Central Excise Act, 1944 & the Customs Act,
1962 under different provisions of the law. Even this broad scheme of operation
is now under cloud & it is difficult to put a reason on it. If the
assessable value has to be the same under the two acts then the acts of the
Parliament would have explicitly stated that & not carved out separate
provision like S 4 in the Central Excise Act or S 14 under the Customs Act? It
is difficult to comprehend that why & how this can be overlooked?
Therefore, there is no reason to say that the ARE-1 value will correspond with
the FOB value in the S/B. The CBEC circular has therefore acknowledged the
same.
Thus the
CBEC in itself has made it specifically clear that the FOB value of Exports
& assessable value of exports are different & cannot be equated. However, the main objection in the present litigation is that the ARE-1
value needs to be discarded & the rebate should be paid on the FOB value of
exports. However, this view has no legal basis in view of the provisions in the
Act, clarifications issued by the CBEC & by way of judicial pronouncements.
If there is any legal provision which states that the Excise duty has to be
paid on the basis of FOB value of exports then the same may please be cited. It
is pertinent to point out here that FOB value but this value is for statistical
purpose & the true FOB value is arrived in the Bank Realization
certificate.
If the CBEC sincerely believes that
FOB value of exports is the assessable value of exports then they can very well
put this as a specific clause in the Central Excise Act or the valuation rules
so that there is no room for any controversy & the assesseees do not suffer
at the hands of the field formations. The CBEC is free to do so & they can
exercise this right right away to stop the frivolous litigation.
It is pertinent to point that the same procedures
are followed when the goods are cleared under the Bond procedure that is
without paying the duty & no questions have been ever raised about the
difference shown in the assessable value given in the ARE-1 & the FOB value
given in the S/B. Do the authorities in position want to say that just the use
of the bond or the rebate procedure can result into the law being read in a
different manner! In our opinion, such mockery of the law cannot be allowed to
proceed.
This is the ninth part of the story. However, the
story of the abuse of authority does not end here. Further lampooning of the
system & abuse by the authorities will follow in the next write up. Till
then Good bye.
rajiv.pec@gmail.com
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