CBEC-Withering bureaucracy turning India into a Banana Republic-8th story

If there is a crime the culprits should be punished. However, I have not come across any provision in the law that the culprit should be tried thrice under the same law for the same violation. I have not come across any provision in the law where without jurisdiction, the authority can proceed with adjudication & prosecute the beneficiary in the law. However, it can only happen in this great Indian Banana republic because of the abuse of the position.

As you know this series pertains to rebate being allowed in respect of exports effected. However, in this case we find that there is mess beyond redemption created but in spite of raising voice against the wrongs, nobody is bothered. Please see the state of affairs & you will yourself come to a conclusion.

The rebate sanctioning authority is not having jurisdiction to question the amount of rebate once the same is authenticated by the relevant C. Ex. official in the jurisdictional office. The CBEC Circular No. 510/06/2000-CX, dated 3-2-2000very specifically states:

Quote:

3. 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. 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:

This effectively means that powers of adjudication in respect of the rebate amount are restricted to the jurisdictional Excise authority & the Rebate sanctioning authority does not have any say in it. Therefore the whole proceeding in reducing the rebate is invalid ab initio because the CBEC circular is binding on the department. The rebate sanctioning authority viz. Astt. Commissioner (Rebate) lacks jurisdiction, therefore the Maritime Commissioner cannot find fault with the order of the Rebate sanctioning authority & direct him to file an appeal. All this was brought to the notice of the Commissioner (Appeals), Mumbai-II & the Revision Authority, GOI. Once again, the result was that the Commissioner (Appeals) simply ignored the submission that the appeal is not maintainable on the grounds of jurisdiction as the ab initio order is not legally valid in terms of the clear cut provisions contained in the CBEC circular. Why the Commissioner/Chief Commissioner/Commissioner (Appeals) ignore such explicit provisions of the CBEC circular. If this is permitted then what is the sanctity of the written word of the law & why it exists. The Commissioner/Chief Commissioner are high ranking officials then why they do not rectify the wrongs instead of permitting 100 s of appeals to be filed by the exporters!  Not only this, the issue was raised with the Revisionary Authority of the Government of India. However, like any other place, there is no justice but the case is remanded to the original authority without taking the aspect of jurisdiction into consideration. Reportedly, the Maritime Commissioner, Raigad’s office has taken up the matter with the CBEC to resolve this imbroglio but to no avail. When the CBEC could settle such the issue when it had arisen in 2000 then why the CBEC is reluctant to do it at this point of time. What stops the CBEC from stopping the misery & harassment! Thus right up to the highest authority a farce & joke is inflicted on the exporters of this country. Is it not disgusting & shameful. If the officials in field formation can go by their own interpretation & flout the explicit procedures, which are binding on them then where can the exporters go for relief? There are several 100 cases & therefore it results in waste of time, energy & effort of all concerned. Why the Commissioners or Chief Commissioners remain oblivious or keep their eyes & ears shut & do nothing about it or if they have done something then why the results are not there to see. The orders in such cases, which is simply a waste of time, energy & effort of all concerned, simply help the Commissioner (Appeals) to fulfil the quota of hearings & issue of orders.

Please note that in several cases it is noticed that the rebate is sanctioned in full by the Asstt. Dy. Commissioner of the Maritime Commissioner’s office but the order is reviewed by the Commissioner & the Asstt./Dy. Commissioner is directed to file appeal against his own order. The moot point of law is that just because Commissioner has reviewed the order, it cannot confer rights on that office to file appeal without jurisdiction.

2. The second SCN in respect of the same ARE-1 is issued by the Additional Commissioner in the office of the Maritime Commissioner. The said SCN is issued on the basis of audit objection. Now, the fact of the matter is that audit is of the department therefore just issuing a SCN for the inefficiency of the departmental official & let the exporter bear the brunt of that is highly deplorable. Therefore there is a second SCN issued by the Maritime Commissioner’s office in itself. Once again, it is pertinent to point out that the audit may be right in raising the issue but in respect of the audit objection, the Maritime Commissioner’s office is duty bound to bring the objection to the notice of the jurisdiction Excise authority for appropriate action instead of issuing the SCN. The Maritime Commissioner’s office cannot gain jurisdiction just because audit has taken objection.

We have already visited the story of 2 SCNs issued, one by the rebate sanctioning authority & the one issued on the basis of the audit objection. However, since the issue of jurisdiction was brought to the notice of the Maritime Commissioner’s office, the Maritime Commissioner’s office was compelled to bring the issue of difference in the FOB value of exports in the S/B & the assessable value in the ARE-1 to the notice of the range officials. Therefore, the third SCN is issued by the jurisdictional excise authority in respect of the same ARE-1. In this SCN, the most intriguing point I have come across is the fact that the SCN is normally issued after 1 year from the date of issue of the ARE-1 i.e. beyond the limitation period therefore the SCN alleges overvaluation which could not be determined at the time of the removal of goods to overcome the limitation period thus mis-declaration is surreptitiously spoken about. Please note that the jurisdictional excise authority acknowledges that overvaluation could not be determined at the time of authentication of ARE-1 but then the moot point is that under these circumstances, how could the assessee be aware of it & how can they be punished. In respect of collusion, suppression of fact, mis-declaration, the law & the judicial pronouncements are clear that the assessee needs to be put to notice to the exact nature of the default so as to enable the assessee to address the issue appropriately. However, everything goes for a toss.

The story is not about 3 SCN s but the SCN s being in respect of the same ARE-1 containing different allegations & proposing different punishment. In some SCN, I have come across cash rebate to the extent of the FOB value & the rest being rebated through re-credit in Cenvat credit account. In other cases, the rebate is restricted to the FOB value & nothing done about the excess lying with the government i.e. same is being treated as good as loss in the way the system functions. In some cases, refund of the excess paid is demanded with interest. In some cases, not only the refund with interest is demanded but even penalty is proposed as penalty does not require mens rea. Thus the jungle rule prevails & not the written word of the law. There are 100s of cases & there is no stoppage of the idiocy. Just think of the plight of the exporter, for Rs. 2000 there are 3 notices to be replied. If this is the case, then even God cannot save this country from the disasters as pronounced by the Supreme court judges.

The CBEC/Chief Commissioner/Commissioners cannot say that they do not understand the implications of the circular issued by CBEC debarring the rebate sanctioning authority from scrutinizing the correctness of assessment but still the wrongs are rampantly committed & adjudicated right up to the Revisionary Authority, GOI. There is something seriously wrong with what’s going on & the exporter has to bear the brunt of the idiocy & inefficiency of the department. Why that is no action is ever taken against the wrong doers! Why the commissioner/Chef Commissioner be held responsible & appropriate action taken. Why the exporters should be harassed & saddled with multiple SCNs.

This is the eighth 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

CBEC-Withering bureaucracy turning India into a Banana Republic-7th story

Why should you do things in a manner which is not commensurate with the quantum of workload & which is bound to create room for cheating, leakages etc. The only reason to my mind is that the vested interests wish to perpetuate rent seeking. Then, is the CBEC blind enough not to see the things in the right perspective! The duty drawback claims are settled in less than 15 days as per the claims made by the officials of the Customs house in the Chief Commissioner’s open House at Mumbai. I believe them because the computers do not cheat & they leave a foot print of the doings.

As you know this is the story about the rebate in exports. Here we describe that how leeway is created by the corrupt policymakers to facilitate & perpetuate corruption.

Please refer to the Notification No. 40/2001-C.E. (N.T.), dated 26-6-2001. The said notification speaks about electronic declaration being put into use for the purpose of rebate. Thus more than a decade ago, it was envisaged that electronic declaration is the way out of the mess. The computerization started more than a decade ago. However, in terms of implementation, nothing is done by the CBEC. Is it not because, the refunds are very good source of rent seeking & the exporter is easy prey. Why in more than a decade this important area operations could not be computerized. Is the Chairman, CBEC not accountable to the citizens of this country for such wrongs in the system! Is the CBEC not accountable to anyone & in any manner for such blemishes.

The biggest source of corruption is the fact that the CBEC allows 90 days for settlement of rebate claims. This in itself tells you that rent seeking can be the only objective for allowing such a long period for the settlement of claims. The opportunity cost of money in this country is in excess of 18%. Therefore normally the exporters are forced to pay upwards of 1% of the rebate claim to get the payment earlier/in time. It will be illogical that why this rent amount will not be paid by the exporter if he gets the payment in 30-40 days therefore there is a genuine case for fuelling corruption through the legislation. I do not whether this can be termed as legalization of corruption by the policy makers & the government. What right the government /CBEC has to withhold my money by just in place a procedure, which curtails efficiency & encourages rent seeking. In the first place, the exporter is required to file the rebate claim along with the copy of the export promotion copy of the shipping bll. The first stumbling block is thus introduced for delay because the EP copies are not released by the customs field formations normally for more than 30 days. Not only this, the print of the EP copies is a serious problem i.e. at times you are not able to take out a photocopy out of the EP copy. Thereafter, you file the rebate claim. Here again the winding procedures ensure that delay is bound to take place. The rebate sanctioning authority needs to get confirmation of exports having taken place from the port authorities. The point here is that if the exports have not taken place then from where the EP copy of the S/B has emerged. Therefore, why the second check is deemed necessary? Even if it is deemed necessary than it should not result in withholding of the rebate because in any case the department is entitled to recovery of erroneous refund with interest. Therefore the interest of the department is well protected. The second point is the check regarding the duty payment. Once again, the game is that the rebate sanctioning authority will say that Duty verification letter has been sent whereas the recipient jurisdictional authority will say that the same is not received. The receipt are only acknowledged & appropriate action taken if the palms are greased. Thus once again a fertile ground is created for corruption. Thus the exporters are required to deploy agents for getting their own money back. In contrast to this please note that in case of drawback claims, the time period for settlement was reduced to 60 days & then to 30 days. When in case of Drawback, the CBEC thinks that time limit of 30 days should apply then why there should be 90 days period allowed in the case of Rebate claims. It tells you only one thing that cheating & corruption is the order of the day. The rebate still remains a cash cow for the department & even the CBEC does not let the opportunity slip from the hands of the department.

 The story does not end here. If you just point out the loopholes, the department has a very easy passage to slip out of the wrongs taking place therefore informing the solution is a must. The thankless officials of the department would then utilize the same to their advantage one day claiming laurels for what is implemented. This writer has made suggestion several times & nobody ever said that it is not workable or in the best interest of all concerned but then you require a will to get things done & none exists in CBEC. The solution is very simple. The ARE-1 details are filled in the S/B. The rebate amount should also be filled in the S/B. The said amount should be then credited directly to the account of the exporter through EFT. The intimation of the rebate should be given to the jurisdictional Excise office & they should counter check whether the rebate is correctly sanctioned or not. If the rebate is not correctly sanctioned then the jurisdictional Excise authority should immediately initiate action for the recovery of rebate with interest. Anyhow, the law permits full one year to the department to take action. This will unburden the system & free up the resources for better use but if that would be the way, this country would move 100 years ahead in no time & beat the best in the world hollow but then is the CBEC listening & the corrupt Board wake up & do something.

This will free up officers in the maritime Commissioners office. These officials can then be utilized for C. Ex. audit 2000. Wherever the rebate claims of the units are in excess of Rs. 50 Lakhs then those units should be compulsorily audited every year by the department. This second check will then ensure that there is no case of leakage or cheating possible until & unless there is collusion to commit fraud.

Please note that there have been frauds on regular basis reported in relation to the rebate claims. If the suggested procedure is adopted then it plugs the loopholes for the frauds thus this is an added advantage.

This is the Seventh 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

CBEC-Withering bureaucracy turning India into a Banana Republic-6th story

The law is not a rational code but this does not mean that legitimate expectations & morality need not be considered while framing the law. The government has every right to collect interest if the payment are delayed by the assessees but at the same time, there is obligation to effect payment of interest in case the refunds are delayed. However, there is no sense of legitimacy. This points to big brother bullying the small fries.

This series pertains to rebate of goods exported. The government is required to collect & pay interest but just see the disparity & you will become aware of the illegitimacy, which prevails.

Under the DOR Notification No. 19/2002-C.E. (N.T.), dated 13-5-2002, the applicable rate of interest for delayed payment by the assessee is fixed @ 15% per annum. However, vide DOR Notification No. 66/2003-C.E. (N.T.), dated 12-9-2003, the department revised the rate to read as @ 13% per annum. This rate of interest continued up to 31.3.2011. However, by way of DOR Notification No. 6/2011-C.E. (N.T.), dated 1-3-2011, the said rate of interest has been changed to 18% per annum. Thus you will see that the policymakers are simply bothered to raise the revenue of the government through hiking the interest rate. There is a hefty hike of 5% in interest rate between 2003 through 3011.

In contrast to this, please see the notifications pertaining to the payment of interest by the department.  Under the DOR Notification No. 24/2001-C.E. (N.T.), dated 11-5-2001, the applicable rate of interest for delayed payment by the department is fixed @ 9% per annum. However, vide DOR Notification No. 17/2002-C.E. (N.T.), dated 13-5-2002, the department revised the rate to read as @ 8% per annum. Further, vide DOR Notification No. 67/2003-C.E. (N.T.), dated 12-9-2003, the department revised the rate to read as @ 6% per annum. Therefore the department is required to pay interest @6% per annum. Please see the inflation rate prevailing in this country. As on date some of the banks pay more than 6% interest in the money lying in the savings bank account. The government is well aware that it is permitting borrowing at rates in excess of 8% per annum in case of tax free bonds. The prime lending rates of most of the banks are in excess of 13%. Therefore, why the government should withhold the money of the beneficiaries beyond liberal period of refund allowed to themselves & pay only 6% rate of interest on that amount. Is the government & the CBEC is not ashamed of such a blatant abuse of authority. Why the government should indulge into such cheating! Is the Chairman, CBEC obligated to explain that why such state affairs prevails? Why there is no legitimacy & rationale exercised in respect of delays in refunds whereas on the other hand the rate of recoveries are increased when the assessee is in fault. The rate of interest for the beneficiaries default has gone up but the rate of interest has not been touched & the rate of interest for the benefit of the government is 18% & whereas for the assessee is 6% per annum i.e. the ratio is 3:1 in the favour of the government. Why the government should indulge into such cheating! Is the Chairman, CBEC obligated to explain that why such state affairs prevails? Why there is no legitimacy & rationale exercised in respect of delays in refunds whereas on the other hand the rate of recoveries are increased when the assessee is in fault. There are other departments such as Income tax, which pay interest in excess of 6% therefore why the interest rate should show disparity. Can the government not have a proper way to determine rate of interest for all central legislations both for refund & recoveries.

Please note that the assessee is not only paying the penal rate of interest but in most of the cases, they are subjected to penalties & fines also. Thus the magnitude of injustice is more glaring.

Not only the above, the biggest irony is that even this measly interest is not paid by the department as already stated in the earlier story. Therefore might is right & India is a banana republic.

There is one more glaring error, which needs to be collected. It is only in respect of the duty that the interest is required to be paid. There are several other deposits made by the assessees. If the assessee wins the case for the faulty & mischievous interpretation of the official concerned then why the interest should not be payable to the assessee & recovered from the official in fault. If this provision is implemented then frivolous litigation & corruption would reduce to a very large extent. The government & the department will become clean in one shot. It is difficult to understand that why this cannot be implemented if we are sincere about tackling corruption.  

This is the sixth 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

CBEC-Withering bureaucracy turning India into a Banana Republic-5th Story

There is a written word of the law & it needs to be followed in letter & spirit. There are no two ways about it. However, who is going to bell the cat that is tell the Indian bureaucracy that the law applies to them & interest needs to be paid. They give it in RTI reply that interest is due wherever the refund is not made within 90 days from the date of the filing of the claim. In personal meetings, right up to the Joint Secretaries agree that interest needs to be paid by the department. However, the interest is not paid. The demand for interest is made in writing though it is not necessary but then nothing moves further. Why the government should bully the beneficiaries in such a manner & prove to be a cheat of the worst order. What kind of an example is the government setting for the beneficiaries to follow. Is the written word of the law to be followed or the jungle rule that might is right & the government is all powerful to get away with any wrong is the new norm.

This series pertains to the rebate claims. There are explicit instructions reiterated by the CBEC that interest needs to be paid on its own accord wherever there is delay in settling any of the refund claims but then who cares for it. Please see Circular No. 670/61/2002-CX, dated 1-10-2002 issued from F. No. 268/51/2002-CX. 8 of the CBEC. The same reads as under:

Quote:

2. In this connection, Board would like to stress that the provisions of section 11BB of Central Excise Act, 1944 are attracted automatically for any refund sanctioned beyond a period of three months. The jurisdictional Central Excise Officers are not required to wait for instructions from any superior officers or to look for instructions in the orders of higher appellate authority for grant of interest. Simultaneously, Board would like to draw attention to Circular No. 398/31/98-CX, dated 2-6-98 [1998 (100) E.L.T. T16] wherein Board has directed that responsibility should be fixed for not disposing of the refund/rebate claims within three months from the date of receipt of application. Accordingly, jurisdictional Commissioners may devise a suitable monitoring mechanism to ensure timely disposal of refund/rebate claims. Whereas all necessary action should be taken to ensure that no interest liability is attracted, should the liability arise, the legal provision for the payment of interest should be scrupulously followed.

Unquote:

From the contents of the circular it is crystal clear that interest is due wherever refunds are delayed beyond the 90 days period. The problem of non payment of interest has been taken up right up to the Chairman of the CBEC but to no avail. What is the use of the CBEC that even after reiteration of the instructions pertaining to the payment of interest, there is no implementation of it. Why the CBEC is week kneed in taking action against the culprits when the problem is brought to their notice. Does the CBEC think it is below their dignity that the legal provision pronounced by them is only for showcasing & not for implementation or it is below their dignity to act upon a complaint filed by an ordinary citizen of this country that the CBEC circular is not followed which is binding on the department. If that is not so then why the CBEC fails to discharge the obligations! Another pertinent to note is that there is concurrent audit as well as the department & the CAG audit then why these audit authorities do not raise objections about the delay in settlement of the refund claims & the payment of applicable interest. Is the audit only aiming at loss to the government rather than implementation of the legal provisions. Is it not totally wrong for the audit not to raise voice in respect of such illegalities & ensure that beneficiaries get their entitlements in time or at the very least get that measly interest of 6% being allowed in respect of the delays. Due to the intervention of the Central Vigilance Commissioner & pursuing the matter relentlessly with the CBEC Chairman, now the information in respect of the refunds is provided through the websites. Therefore the information is available to the Commissioners, Chief Commissioners as well as the CBEC that how much delay is taking place in the disbursements of the legitimate entitlements of the exporters. Therefore why these officials are not able to abide by their duty & ensure that wherever the refunds are delayed, the interest is paid. Is any official of the government concerned or ashamed of this disgusting state of affairs. The answer is emphatic “NO”. Please carry out special audit of Maritime Commissioner of C. Ex., Raigad & this will be an eye opener that what is the ground reality is appalling. There is delay in sanction of rebates beyond 90 days in thousands of cases but till date no interest has been paid in spite of raking up the issue with all concerned. Such irresponsible behavior is unacceptable in the civilized world. Therefore once again plea is made that sanity should prevail & beneficiaries should be granted interest in all cases. The Chairman, CBEC should personally ensure that this is complied with & report the compliance on the website of the CBEC. This is essential so that beneficiaries don’t suffer at the hands of the field formations for no fault of theirs.

This is the fifth 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

CBEC-Withering bureaucracy turning India into a Banana Republic-4th Story

India is a country where the law can be differently interpreted because the law is made in that flexible manner. Therefore a high court can issue a well reasoned order & the Supreme court can reverse it in a well reasoned order. Both the decisions are hailed as remarkable albeit at different points of time. Not only this, the decision of the Supreme Court is subject to review. All this is very fine but then this state of affairs is the strength & pillar of systemic corruption & rent seeking at the lower rung. Those who take care of the authorities get five star treatment & favourable decision but those who work in a legally oriented manner are forced to bear the brunt of the loopholes & even forget their legitimate entitlements.

This is a series pertaining to the sanction of rebate on exports. In this write up we provide that how even the highest authority i.e. the Revisionary Authority, Government of India can change stand even without battling an eyelid & continue to do so even after the issue is raised in the appeal that the authorities are bound by the said order as the same has not been challenged or reversed by any higher authorities. However, all such submissions fall on the deaf ears. If such shameful & disgusting state of affairs exist in the implementation of the settled law then is it wrong to say that India is a banana republic.

The Govt. of India’s Orders in Revision Nos. 1685.10-CX dated 03.11.2010 and 1805/10-CX dated 24.12.2010 in the cases of M/s. SPL Industries, Faridabad and M/s. Sterlite Industries (India) Ltd, Tuticorin respectively are cited before the authorities. Therefore going against these orders without citing the differences is not legally tenable. These orders are binding & need to be followed until the same are set aside/reversed by any higher authority. Therefore, citation in respect of Furnace Fabrica order in Appeal No. SRK/345/Bel/2008 dtd. 4.6.2008 is of no help to the department.

In case of Sterlite Industries Ltd., Tuticorn, the Revisionary Authority has upheld the order passed by the H’onble CESTAT passed in the case of Sterlite Industries Ltd., Tuticorn & the H’onble CESTAT ruled in the operative part of the order in paragraph 2 of the Final order No.  1431/2008 dtd 8.12.08 as under:

Quote:

The lower authority ordered recovery of rebate allowed to the extent of Rs. 4,50,13,457/- on the basis that the appellants had claimed rebate of duty paid on the CIF value instead of FOB value of each of the consignment covered. We find that an exporter is entitled to rebate of the entire duty of excise paid on a consignment of excisable goods on its export. There is no dispute that the appellants paid the impugned amount as part of the duty of excise on consignments exported and covered by ARE-1s. A claim for the said amount cannot be denied on the ground that rebate is admissible only on the duty on the FOB value and not on the CIF value as long as the same represents the transaction value. In the instant case, there is no dispute that the entire amount of Rs. 16,10,23,430/- including the impugned amount of Rs. 4,50,13,457/- under supplementary invoices had been paid by the assessee as excise duty on the transaction value of the goods.

Unquote:

Thus the H’onble CESTAT has affirmed that freight & Insurance are part of the transaction value & the same is accepted by the Revisionary Authority. Under any circumstances, it cannot be the case of the department that different interpretation of the law prevails depending upon the magnitude of the duty.

Similarly, in case of SPL Industries, Govt. of India’s Order in Revision No. 1685.10-CX dated 03.11.2010, the following is concluded:

A.The order passed in case of Shri Bhagirathi Textiles Ltd., 2006 (2002) ELT 147 (GOI) has been discussed at length & it is concluded that case has no bearing in cases where the foreign exchange is realized in full as per the declaration made by the exporter. Therefore citation of Bhagirathi Textiles by the appellant is of no value.

B. The operative part of the order reads as:

Quote:

Government observes that that the respondent has claimed that they were having the contract with the buyer which included the sale price of the goods plus freight & Insurance charges, so it is transaction value of the exported goods under S 4 of the Central Excise Act, 1944 and they are eligible for total rebate in cash. The foreign remittances as per BRC s is equal to the ARE-1 value. Commissioner (Appeal) have examined their contention in detail and rightly held that duty paid in this case on contractual prices/transaction value is to be rebated.

Unquote:

Thus once again it is crystal clear that freight & insurance is included in the transaction cost & rebate cannot be denied on that. In our case, full realization of export value has taken place therefore there cannot be any reduction in the duty amount paid.

The two orders are not set aside. The orders are passed by the RA, GOI itself, still they are ignored. Is it a case of selective amnesia? There is a different law for the rich & the influential corporate & a different law for the small & medium enterprises. Are the authorities beyond the law & they can behave in such whimsical manner & get away with it. However, when law does not come to the rescue, cheating & abuse of authority is resorted to & decisions are giving by ignoring the submissions placed on record. This can only happen in India because there is absolutely no fear of whatsoever nature because the authorities are sure that nobody will pay any heed to the complaints of such misdemeanour & ever take action against them. Thus there is binding legal precedent but no implementation of it, thus reducing India to a banana republic.

This is the fourth 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

CBEC-Withering bureaucracy turning India into a Banana Republic-3rd Story

Various authorities such as excise, Customs, DGFT etc. exist for facilitation & implementation of the law in proper perspective. However, the law is spelt out in such a manner that it will help those in power to provide five star service to those who take good care of them & make the life miserable of those who work in a legally oriented manner. The position is so bad that even the CBEC circulars, which are binding on the department are ignored.

As you will remember, this series pertain to rebate on the export of goods where hundreds of frivolous appeals are coming up & the time, energy & effort of all concerned is wasted.

we invite your reference to the CBEC circular issued from F.No. 224/37/2005-CX. 6, dated 24-12-2008, which pertains to the duties & responsibilities of the Central Excise officers.

Quote:

3.7

Verification of ARE-1/ARE-2 for export of goods.

To verify the identity of the export goods and also verify the particulars of assessment and correctness of duty paid or payable indicated on ARE-1/ARE-2.

He may also verify the identity of the export goods and particulars of assessment on random basis. Ensure compli-ance with the procedure specified in Notification. No. 19/2004-C.E. (N.T.) dated 19-9-2001 or in Notification No. 42/2001-C.E. (N.T.) and any other relevant notification/circular.

Unquote:

Therefore, the range officials at all points of time have been responsible for the assessment and correctness of duty paid or payable indicated on ARE-1/ARE-2. Once again, neither the departmental officials nor the Revisionary authority can conclude that the department officials failed in carrying out the assigned duty/responsibility or even after they carried out the same then also the department does not accept that assessment & the rebate sanctioning authority can alter that assessment without any authority in terms of the law. It is pertinent to point out that the CBEC circulars are binding on the department & the department cannot take stand contrary to the circular & the  Apex Court decision in case of CCE V/s. Indian Oil Corporation Ltd. -2004 (165) E.L.T. 257 (S.C.) is relied upon by the exporters.

The pertinent issues which then arise are that is the CBEC not aware of the circular & the responsibilities of the jurisdictional Excise officials & if they are then why can’t they take appropriate action against the culprits instead of permitting the harassment of the exporters in an unabated manner. Is the CBEC not responsible for such disgusting & shameful state of affairs more than the field formations for not being able to ensure that what they say in terms of the law is implemented.

The department has no counter to the facts placed on record. However, when law does not come to the rescue, cheating & abuse of authority is resorted to & decisions are giving by ignoring the submissions placed on record. This can only happen in India because there is absolutely no fear of whatsoever nature because the authorities are sure that nobody will pay any heed to the complaints of such misdemeanour & ever take action against them. Thus there is binding legal precedent but no implementation of it, thus reducing India to a banana republic.

This is the third 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

CBEC-Withering bureaucracy turning India into a Banana Republic—2nd story

In the hierarchical system followed in India the decision of the higher authority is to be honoured & implemented till that decision is reversed. However, in the case of rebate claims even this is being sent for a toss. The appellate authorities, which includes the Commissioner (Appeals) as well as The Revisionary Authority, Government of India have no way to overcome the binding precedent but then the way to get away with this is not to cognizance of the citation & deliver a decision. This is being done with impunity in spite of the fact that it is very clearly pointed out in the appeal documents that this mischief is resulting into the miscarriage of justice. Therefore not in the legal provisions contained in the law are derided but the settled issues by the judicial authorities are ignored which compels me to call India a Banana Republic.

The department has been citing the Hon’ble CESTAT decisions in case of M/s Gimatex Industries Ltd. Vs CCE Nagpur [2010(261)E.L.T.1026(Tri-Mumbai)] & Nagpur Transwell power Pt. Ltd. Vs CCE, Nagpur 2009 (243) ELT 459(T) saying that ‘assessment’ includes “ Self assessment” is not correct for the purpose of appeal under section 35 F of the CE Act. They are resorting to this because all categories of exporters as on date are allowed to remove the goods under Self Removal Procedures (SRP) therefore the department is trying to take a stand that the jurisdiction Excise authorities are not playing any role therefore there is no assessment carried out by the department. Since there is no assessment carried out by the department, the department is saying that there is no challenge to the value declared in the ARE-1/Invoice is necessary.

However that is not the truth of the matter in the case of the removal of goods for exports. The fact is that the documents are prepared & submitted to the range office & the relevant official examines the said documents & authenticates the triplicate copy of the ARE-1. Thus assessment is completed as acknowledged in the CBEC circular. Therefore the decisions of M/s Gimatex Industries Ltd. Vs CCE Nagpur [2010(261)E.L.T.1026(Tri-Mumbai)] & Nagpur Transwell power Pt. Ltd. Vs CCE, Nagpur 2009 (243) ELT 459(T) are distinguishable where no authentication of the ARE-1 by the Range officials was involved. The cited decisions are therefore not applicable to the case. Here in this regard, we invite reference to the case law 2010 (259) E.L.T. 369 (Bom.) in case of MAHARASHTRA CYLINDERS PVT. LTD. Versus CESTAT, MUMBAI wherein the hon’ble Mumbai High Court has ruled that Question of refund of duty paid not arises in self-assessment cases where goods are cleared under self removal procedure unless self assessment is varied - Supreme Court ruling in Priya Blue Industries case [2004 (172) E.L.T. 145 (S.C.)] holding validity of assessment cannot be considered in refund claim, applicable to self-assessment cases also - Self-assessment could be challenged by filing appeal - Impugned order holding refund claim as hit by time bar, sustainable. This effectively means that even if the department concedes only to the extent that there was self assessment carried out & the verification of the ARE-1 is simply a ritual or the Range officials are not required to perform the duties specified under the CBEC circular then too they were required to challenge the self assessment to overcome the limitation placed by the self assessment to vary the rebate amount stated in the ARE-1 duly certified by the Range officials. The judgement is squarely applicable to the rebate cases. Therefore without challenging the self assessment, there is no way that the assessment carried out in the ARE-1 can be varied & rebate amount reduced. This position prevails even after the issue is brought to the notice of all concerned. However, when law does not come to the rescue, cheating & abuse of authority is resorted to & decisions are giving by ignoring the submissions placed on record. This can only happen in India because there is absolutely no fear of whatsoever nature because the authorities are sure that nobody will pay any heed to the complaints of such misdemeanour & ever take action against them. Thus there is binding legal precedent but no implementation of it, thus reducing India to a banana republic.

This is the second 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