23.06.2014
Monday
ONE of the bitter grouses of the IRS officers is that their Boards, CBEC and CBDT do not have any financial powers. It is often derisively stated that the mighty Chairman of the Board is not empowered to buy a set of cups and saucers or that a Member of the Board cannot buy a sheet of white paper.
The services had demanded, before the Pay Commission, functional and financial autonomy on par with that available in Railway Board for the Revenue Boards - CBEC and CBDT.
The VI Pay Commission was not of course impressed and observed,
Work entrusted to CBEC/CBDT is revenue collection, which is one of the sovereign functions. The Boards cannot, therefore, be equated to the Railway Board which primarily discharges functions of a commercial nature. As such, complete functional and financial autonomy to CBEC/CBDT is not justified.
Even the recent Tax Administration Reform Commission (TARC) recommended financial autonomy for the Boards.
Even in the presentation before the Finance Minister last month by CBEC, this issue had come up.
But it seems THEY HAD THIS POWER SINCE 2008 - and surprisingly, nobody, not even the Board knew about this! Was it a closely guarded secret?
Anyway, it goes to the credit of the Chairperson of CBEC Shanti Sundharam who has now brought this hidden power to light.
In a note to Members of the CBEC, she states,
It is ascertained that delegation of powers has already been given to the CBDT and , CBEC vide OM F.No.15/6/2008-IFU-III dated 6.6.2008. It is also understood that while CBDT has put in place a system for obtaining expenditure sanction under these delegated powers, CBEC is yet to follow. Further, it appears that the field formations are also not aware of this delegation. Wide publicity needs to be given to this OM and appropriate structure needs to be put in place within the Board for proper exercise of powers delegated under this OM. Necessary action may be taken for the same.
In the OM F.No.15/6/2008-IFU-III dated 6.6.2008, referred to by her, it is informed that:
With the approval of the competent authority following procedure is prescribed for sanction of expenditure in CBDT and CBEC.
a) Proposals requiring sanction of expenditure beyond HoD powers and up to Rs. 2 Crores will be routed through JS(Admn)/Member to Financial Adviser for consideration and approval.
b) Proposal requiring sanction of expenditure beyond Rs. 2 Crores and upto Rs. 5 Crore will be routed through the JS(Admn)/Member concerned, Financial Adviser to the Chairperson of the Board for approval.
c) Proposal requiring sanction of expenditure beyond Rs. 5 Crore and upto Rs. 10 Crore will be routed through the JS(Admn)/Member concerned, Chairman and Financial Adviser for obtaining the approval of the Revenue Secretary.
The above changes in the level of consideration and disposal of expenditure proposals may be intimated to all the concerned in CBDT, CBEC and other organizations.
This OM had been communicated to the Chairmen of CBEC and CBDT. Obviously it got lost in glaciers of papers floating around in the ocean of North Block. And this did not come to light for six long years. Had it been known and implemented in 2008, the Boards could have by now asked for an enhancement of the limits and the Chairman could have got power to sanction expenditure up to Rs. 20 Crore.
Better late than never - The Board Chairman can now buy those cups and saucers without being at the mercy of the benign JS(Admn). I eagerly look forward to have tea in one of those cups (bought with the full authority and power of the Chairman of the Board). I hope I get invited!
CBEC Chairperson's Note 40/2014, Dated: May 31, 2014.
Why not Financial powers for ARs in CESTAT and Commissioner (A)?
THE Authorised Representatives of the CBEC in CESTAT and the Appellate Commissioners in the field work with absolutely no funds allocated to them. They are the mercy of the field Commissioners for little things like stationery, vehicles, staff, TA bills etc,. While some Commissioners are gracious in providing facilities to their colleagues posted as Appellate Commissioners, others are outright rude and mean and ensure that the Commissioner(A) does not get many facilities.
The position of the ARs in Regional Benches of the CESTAT is worse.
The Board should allot some funds to these officers for better working of the system.
No Political Recommendations in Transfers - CBEC
THE Finance Minister has observed that many representations are being received from VIPs and other political sources recommending transfer/posting of officers belonging to Customs and Central Excise Departments. He has desired that this practice be discouraged.
CBEC reminds its officers Rule 20 of the Central Civil Services (Conduct) Rules 1964 which stipulates-
"20. No Government servant shall bring or attempt to bring any political or other outside influence to bear upon any superior authority to further his interests in respect of matters pertaining to his service under Government."
Board wants the above provisions to be adhered to and no outside influence is brought for posting and transfer.
Easier said, than done. Transfer and posting is big business in CBEC and some of the Customs and Central Excise officers are capable of influencing the topmost authorities of this country. Even for very junior posts like Inspectors, recommendations from the highest authorities are brought in. Very recently we heard about large sums of money being given to the staff of a Minister for a particular post as a Member of a Board! Politicians have a big role in transfers and as long as they have their say, they cannot simply shoo away their party workers. This does not mean that transfers should be the exclusive domain of the bureaucrat. Without a politician to check him, the bureaucrat will go berserk. Often the senior babus have no concern or sympathy for their subordinates and will not listen to reason - this is one of the reasons why the babus have to approach the politicians for recommendations. If the senior babu was a little fair and reasonable, the politician would have had no role.
The only solution is to make the system totally transparent and computerised. Transfers should be finally done by a Committee consisting a couple of employees after a session of counselling with the affected employees and everything recorded and everybody accountable.
But who will do this? Who would like to abdicate his power and the power to transfer is the absolute power in Government.
CBEC OM in F No. C.50/54/2014-Ad.II, Dated: June 20, 2014
Hotels beware - you may be called upon to pay excise duty- M.O Circular
MUMBAI-I Central Excise Commissionerate has issued a Modus Operandi Circular regarding evasion by cake shops.
Intelligence received reveals that Hotels, Restaurants, Clubs, Standalone Retails Outlets of food items (cake shop) are engaged in the manufacture & sale of excisable goods viz. Other food preparations falling under Chapter Nos. 16,19 (except 1905) & 20 and Cakes, Pastries, Cookies, Biscuits falling under Chapter-heading No.1905 of CETA 1985 with an aggregate turnover of these goods exceeding well over Rs.4 Crores. Although, the 'Other food preparations' are chargeable to Nil duty at Sr. No. 12 & 13 of the Table under Notfn. No. 12/2012 dt.1.3.2012, nevertheless they remain "excisable goods" as defined in Section 2(d) of Central Excise Act, 1944. Since the combined turnover of the dutiable goods like 'Cakes, Pastries, Cookies, Biscuits falling under Heading No.1905 and 'Other Food Preparations' being exempt but excisable goods, falling under Chapter Nos. 16, 19 & 20 of CETA, 1985, exceeds Rs. 4 Crores, such manufacturers (hotels, restaurants, clubs, retail outlets) become ineligible to the benefits of the threshold exemption limit for other excisable goods manufactured, in this case for cakes, pastries, cookies, biscuits falling under Heading No. 1905.
Accordingly, 11 cases were detected against such manufacturers unearthing an evasion of Central Excise Duty of Rs.4 Crores. There also had been a recovery of total Rs.2.80 Crores.
As such Hotels, Restaurants Retail outlets, Clubs, Cakes shops who manufacture the cakes, pastries, cookies, biscuits falling under Chapter-Heading No.1905 alongwith 'Other Food Preparations' of Chapter Nos. 16, 19 & 20 are liable to pay Central Excise duty on products of Chapter Heading 1905 in the succeeding financial year, right from the first clearance, in terms of Para 2 (vii) read with Para 3 A of the Notfn. No.8/2003 as amended dt.1.3.2003, in case their aggregate turnover of all excisable goods including exempt goods has crossed Rs. 4 Crores in previous financial year and the benefit of SSI Notification No.8/2003 dated 01.03.2003 as amended will not be available to them.
The above modus operandi of wrong availment of benefit of SSI Notification 8/2003 dated 01.03.2003 as amended and resultant non payment of Central Excise duty on cakes pastries cookies Biscuits falling under Chapter 1905 is brought to the notice of the field formations across the country for taking necessary action in similar cases.
The Commissioner wants Action taken and results achieved in this regard to be communicated to his office.
Hotels, Restaurants and even cake shops - beware - you may have a friendly visit from the excise office soon.
FTP - Conditions for export of Pig Bristles to EU
GOVERNMENT has amended the Chapter 5 of Schedule 2 (Export Policy) of ITC(HS) Classification of Export & Import Items, to stipulate conditions for export of Pig Bristles and Hair under HS Code 05021010 to EU. The conditions are:
(i) A 'Shipment Clearance Certificate' is to be issued consignment-wise by the CAPEXIL indicating details of the name and address of the exporter, address of the registered plant, IEC No. of the exporter, plant approval number, nature of export product, quantity, invoice number and date, port of loading (Name of the port) and destination.
(ii) After the shipment is made, the exporter shall also provide a 'Production Process" Certificate and/or Health Certificate to the buyer consignment-wise to be issued by CAPEXIL as per the requirement of EU.
DGFT Notification No. 83 (RE-2013)/2009-2014, Dated: June 20, 2014
Jurisprudentiol - Tuesday's cases
 Service Tax
Refund - Export of goods - Tax paid on services of Commission agent on reverse charge basis - refund claimed under incorrect notfn. 17/2009-ST instead of 18/2009-ST - Claim rejected by original authority without issuance of SCN or giving personal hearing - Matter remanded: CESTAT
THE appellants are exporters of goods and availed the services of Commission Agents located abroad. On the amounts paid to Commission agents they are paying service tax on reverse charge basis and availing CENVAT credit of the tax paid.
The CE officers who audited their unit suggested that the appellant should reverse the CENVAT credit and avail the exemption under Notification 18/2009-ST dated 7.7.2009.
Income Tax
Whether provisions of Sec 153C allow AO to invoke it casually and need not record any satisfaction - NO: Bombay HC
BEFORE High Court, the Revenue's counsel had submitted that section 153C had been brought on the statute book so as to enable assessment of the income of any other person. It was submitted that this section opens with a non-obstante clause and enables AO to proceed and assess the income of any other person. It was submitted that whenever the AO was satisfied that any money, bullion, jewelery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A then, such seized documents or assets and equally requisitioned shall be handed over to AO, having jurisdiction over such other person. It was further submitted that this section mandates that AO must proceed to issue notices and assess or reassess the income of such other person in accordance with the provisions of section 153A.
The issue before the Bench is - Whether the provisions of Sec 153C allow the AO to invoke it casually and need not record any satisfaction. And the answer goes against the Revenue.
Central Excise
Penalty u/r 26(2) of CER, 2002 on first stage dealer for purported issue of fraudulent invoices - Penalty is imposed on basis of assumption and presumption which have no legs to stand - without categorical finding, no penalty can be imposed: CESTAT
THE appellant, Proprietor, obtained registration as a First stage dealer in January, 2004. He filed Nil return for the quarter ending March, 2004 and June, 2004 and upto 20.7.2004. Thereafter, he surrendered the Registration on 21.7.2004 on the ground that no business has been transacted during the registration period.
See our Columns Tomorrow for the judgements
Until Tomorrow with more DDT
Have a nice day.
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