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

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