CBEC-Withering bureaucracy turning India into a Banana Republic

CBEC-Withering bureaucracy turning India into a Banana Republic

If there is a law but the same cannot be implemented then what is the use of such a law & why the mockery of law be tolerated. If you bring the problem to the attention of those responsible then the system is made to work in such a manner that problems are diverted to those responsible for creating the problem even in the Grievance Redressal system of the government. Under these circumstances, can you ever expect justice at the hands of the culprits! Thus effectively, the law is for showcasing & just managing the image of the department but not for implementation. Is this not a situation of the Banana Republic.

The Issue: The exporters are entitled to rebate of duty paid at the time of removal of goods for export on the transaction/assessable value as the basic premise of export promotion is that taxes & duties cannot be exported. For proper administration, the triplicate copy of the ARE-1 is authenticated by the relevant excise official for correct duty payment in terms of the duties & responsibilities of the excise official. However, the rebate officials has raised an issue that the difference between the ARE-1 value & the FOB value of exports is freight & insurance & the duty is not payable on freight & insurance in spite of the fact that authentication of the ARE-1 stands completed & freight & insurance are part of the transaction value if not shown separately in the invoice as per the legal provision. The fact is that SCNs are issued for differential value of Rs. 2000 even when the freight & insurance for the shipment is Rs. 20000. The FOB value shown on the shipping bill is not the FOB value of the transaction. Therefore, restriction of rebate on this value has no legal basis because exports are not accounted for by the exporters in their books on this basis nor the government takes this value for the disbursement of entitlements. The duplicate & triplicate copies are authenticated by the Customs official & export certified on these two copies. The rebate sanctioning authority is under obligation to sanction the rebate amount indicated in the ARE-1 & directed to refer the matter to the jurisdictional excise authority in case any discrepancy is observed. However, nobody seems to care & there is jungle rule in the sense that field formations indulge into whimsical interpretations & do whatever they like. Reportedly, CBEC is informed by the Maritime Commissioner, Raigad but to no avail.

The case in point is that of sanctioning of the rebate on export by the office of The Maritime Commissioner of Central Excise. There exists a CBEC circular but then who cares & this is applicable right up to the Maritime Commissioner, Commissioner (Appeals), Revisionary Authority, Government of India & the CBEC. The relevant extracts of the CBEC Circular No. 510/06/2000-CX, dated 3-2-2000 are reproduced below for ready reference.

Quote:

Thus, the duty element shown on AR-4 has to be rebated, if the jurisdictional Range officer certifies it to be correct. There is no question of re-qualifying the amount of rebate by the rebate sanctioning authority by applying some other rate of exchange prevalent subsequent to the date on which the duty was paid. It is also clarified that the rebate sanctioning authority should not examine the correctness of assessment but should examine only the admissibility of rebate of the duty paid on the export goods covered by a claim.

3. In the rebate sanctioning authority has reasons to believe that duty has been paid in excess than what should have been paid, he shall inform, after granting the rebate, the jurisdictional Assistant/Deputy Commissioner. The latter shall scrutinize the correctness of assessment and take necessary action, wherever necessary. In fact, the triplicate copy of AR-4 is meant for this purpose, which are to be scrutinized by the Range officers and then sent to rebate sanctioning authority with suitable endorsement.

Unquote:

A. This effectively means:

i.The CBEC circular says that the duty element shown on AR-4 has to be rebated, if the jurisdictional Range officer certifies it to be correct. Therefore, once the jurisdictional Excise official has authenticated the triplicate copy of the ARE-1, the certification procedure stands completed. The language of the CBEC circular is unambiguous & leaves no room for interpretation. Therefore there is no way that Rebate Sanctioning authority can then question the rebate amount.

ii. The CBEC circular says that the rebate sanctioning authority should not examine the correctness of assessment but should examine only the admissibility of rebate of the duty paid on the export goods covered by a claim. Once again there is no ambiguity in the language & room for any interpretation. Please note that the assessment of duty is vested in the jurisdictional Excise authority & any other authority like Maritime Commissioner’s office cannot slip into the shoes of the jurisdictional authority & open the assessment & reduce the rebate amount.

iii. The CBEC circular states further in no uncertain terms that if the rebate sanctioning authority has reasons to believe that duty has been paid in excess than what should have been paid, he shall inform, after granting the rebate, the jurisdictional Assistant/Deputy Commissioner. The latter shall scrutinize the correctness of assessment and take necessary action, wherever necessary.

iv. Please see the highlighted portion of the CBEC circular in iii above. The rebate sanctioning authority is directed to sanction the rebate without demur & then take up the issue with the jurisdictional Assistant/Deputy Commissioner. Does this leave any room for argument in terms of what action is to be taken by the Rebate sanctioning authority? Therefore, why the Rebate sanctioning authority is not ready to accept the simple provision of the law that only the assessment authority is vested with the power to scrutinize the correctness of assessment for the simple reason that anybody & everybody cannot be allowed to indulge into assessment/re-assessment because this will simply lead to chaos. The procedure carved out for administrative convenience cannot be objected to by the field formations. Why the rebate sanctioning authority is then trying to overthrow this piece of law & indulge into insubordination?

V. Last but not the least important is the fact that the CBEC circular also states that the triplicate copy of AR-4 is meant for this purpose, which are to be scrutinized by the Range officers and then sent to rebate sanctioning authority with suitable endorsement. Once again, the CBEC has very clearly stated that the triplicate copy of the AR-4 (ARE-1 as on date) is to be scrutinized by the Range officials & then sent to the rebate sanctioning authority. Thus it is clear that the Range officials are completing the process of assessment at that point of time. The CBEC circulars are binding on the department & the department cannot take stand contrary to the circular as per the Apex Court decision in case of CCE V/s. Indian Oil Corporation Ltd. -2004 (165) E.L.T. 257 (S.C.).Thus this is a settled issue.

Therefore the issue was taken up right up to the CBEC & the points of reference are:

A.Why the officials of the Maritime Commissioner’s office are not complying with the CBEC circular binding on them? Why the CBEC is not able to take action against such defiance & insubordination. It cannot be the case of the CBEC that provisions of the law are only for showcasing.

B. There is S 166 &/or in the IPC which says that if the officials in the position are not acting as per the law & indulging into harassment of the beneficiaries then this is a punishable offence. Therefore the CBEC is once again requested that please ensure that the law needs to be complied with & no harassment of the beneficiaries continues any further.

However, there is still no stoppage of harassment of the assessees. The subject issue has been a matter of innumerable appeals. It has been explicitly pointed out in the appeals, the existence of the CBEC circular but just the defiance of the appellate authorities right up to the Revision Authority, Government of India is baffling. Specific complaint has been made right up to the CBEC but to no avail. The legal provision is just dis-regarded & not even taken on record in the decisions. Is it not just abuse of authority by the officials concerned! Are the appellate authorities like Commissioner (Appeals), Revision Authority, Government of India required to work in this manner & continue persecution of the exporters. Why the CBEC cannot take appropriate action when such defiance is brought to their notice. Is the CBEC incapable of getting their own circular implemented then what is the use of such a Board?

The other set of issues which arise are in reference to the CBEC. Is the CBEC not aware of the circular & the contents of the same! If the circular is out of date then why the same is not withdrawn/rescinded? Does the CBEC think that power of assessment being restricted to the jurisdictional Excise authority is wrong? The CBEC issued circular in the past then why they cannot revisit the issues related to the Rebate once again instead of hundreds of appeal getting filed all over the country & resulting in wastage of time of all concerned? Are these appeals not a mockery of the CBEC circular & the CBEC! Why then CBEC is maintaining stoic silence! The writer is given to understand that Maritime Commissioner of Central Excise, Raigad has made a representation to the CBEC but to no avail.

This is the first 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