TIOL-DDT 2455
14.10.2014
Tuesday

THIS is one of those strange but true cases.

An adjudicating authority of Central Excise demanded a duty of Rs. 20 lakh with equal penalty for shortage of inputs during physical stock taking. The Commissioner (Appeals) set aside the adjudication order on the ground that in a similar case, the Tribunal had allowed the appeal of the assessee.

The Superintendent in the Adjudication Section put up a note explaining the facts and also mentioned that the Tribunal Order referred to by the Commissioner (A) was under appeal to the Supreme Court.

His Assistant Commissioner simply signed the note very promptly on the same day.

The Additional Commissioner wrote, "Note at pre-page and above pl. In view of "A" above, we may appeal against the O-I-A."

The jurisdictional Commissioner wrote “accepted"and signed. After ten days the other Commissioner in the Committee of Commissioners simply signed the note-sheet.

The lower level officers thought that the Commissioner has accepted the order of the Commissioner (A) and they kept quiet. After some time, the Divisional officer wanted to find out whether the Commissioner had accepted the order of the Commissioner (A). Then they realised that the Commissioner had ‘ accepted ' the proposal to file the appeal and not the order of the Commissioner (A).

So a quick appeal was filed in the Tribunal with an application for condonation of delay and Stay of the lower order. By this time there was a delay of 199 days in filing the appeal.

The Tribunal dismissed the appeal.

Revenue does not keep quiet in such cases and took the matter in appeal to the High Court, which remanded the matter to the Tribunal to consider the condonation of delay.

In the second round, the Tribunal condoned the delay and admitted the appeal.

The Tribunal considered the appeal on merits and held: there is no application of mind by the Committee of Commissioners and they have merely appended their signatures to the note sheets prepared by the subordinate officers. In that view of the matter, the review order has to be held as not sustainable and consequently appeals have to be held as not maintainable. The Revenue's appeal is accordingly dismissed on the said ground.

This is not a stray case - this is replicated in almost all the Commissionerates, some in more sophisticated ways. See how much time and money must have been spent in pursuing a useless litigation right up to the High Court - all because the Commissioners were too busy to write a few words with clarity!

In this case, even assuming that the Commissioner accepted the proposal of the subordinate to file an appeal, just by writing "accepted", how did he expect the appeal to come up - obviously he wanted somebody else to do that.

Should we continue with this sham of a departmental adjudication?

The other day I saw an order by a Commissioner in which a person not connected with the case at all was imposed a penalty. I asked the assessee as to who this person was. The assessee simply laughed and said - this is a copy and paste mistake; the Superintendent had picked up this from another order pertaining to another company.

ACES - Reorganisation Blues in CBEC

THE ACES website informs:

Although the reorganization of formations under CBEC will take effect from 15th October 2014, to avoid inconvenience to the existing Central Excise and Service Tax assessees, they will continue to be mapped in ACES to the existing location codes (Commissionerate, Division and Range). Applicants for new registration can also apply to the existing formations. After migration of the assessees to the new formations, information will be sent to the assessees via email informing them of their new locations. Facility will also be provided in ACES for assessees to ascertain their new location codes, on their own, without visiting the Range offices, through "Know Status of Assessee" in highlights section on ACES website and filling of the registration number.

Yesterday DDT had reported a letter from CBEC Member SB Singh giving almost the same information.

The Indian Reporting Service - CBEC spends a whopping Rs. 140 Crore on reporting

THIS is authentic; the CBEC spends a whopping Rs. 140 crore on reporting - all thoroughly useless. And this amount is seven times what you spend on the CESTAT!

And you know this 140 crore does not include paper and other infrastructure!

The source of my information is the Board itself.

In a letter to the Chief Commissioners, CBEC Member SB Singh says,

"A whopping amount of Rs 130-140 Crore is being spent annually on preparation of various reports. The estimated cost is not inclusive of paper, telecommunication infrastructure and other resources that go into report making. We need to ensure that the man-hours spent and cost involved are indeed put to productive use.

In this direction, first and foremost, we are eliminating paper based reporting. This would be followed by developing a MIS which would over a period of time eliminate unreasonable and overburdened reporting requirements."

The Member wants a participative and active cooperation in building a robust and reliable MIS for the organisation.

CBEC Member's D.O.F.No.296/127/2013-CX.9, Dated: October 10, 2014

No Two Reports Tally - New Reporting System for CBEC

A CBEC Instruction to the Chief Commissioners and Commissioners says,

At present there are more than 100 reports that are being sent by the field formations on a monthly basis to various Directorates and sections of the Board. Also, the present reporting system within the Department suffers from the problem of unreliability and susceptibility to error as it involves manual compilation at various stages. Consequently, no two reports ever tally. Further, the information so laboriously collected is not readily available for performance evaluation or informed decision making. Taking the above into cognizance, the Board has approved development of MIS, which over a period of time, would eliminate unreasonable and overburdened reporting. The Working Group set up for this purpose has held detailed consultations with all stakeholders and laid down the strategic roadmap for the development of the MIS.

The Board has given several directions on the new MIS. The Board has emphatically informed that no reports would be called from field formations if information sought is available and it can be retrieved from the existing applications. This, if followed, can really change the working of the Department. As of now, the entire time of the field is spent in sending reports containing information which is already available with the Board.

And whenever the Board asks for any information, the sufferer is always the assessee as he has to furnish the information wanted by the Department.

Ten years ago we carried an in-house article THE INDIAN REPORTING SERVICE (IRS) IS IN ACTION; GOES ON RETURN-PRESCRIBING SPREE!

In the article, we mentioned,

WHENEVER the CBEC wants to prove that it is active and working, the first thing it does is to write a letter to the Chief Commissioners about very ordinary things and asking for a report. There are occasions when several members shoot off several letters and all asking for reports. Since t he shelf life of most of the Members is only a few months , these letters are generally ignored in the field and some statistical reports are furnished and the whole reporting episode ends with either the retirement of the Member concerned or a reshuffle in their charge. But reporting as such will not stop. The new Member will ask for a new report and the saga continues. This report is dead; long live reporting - After all they have reduced the Indian Revenue Service into the Indian Reporting Service.

We also suggested a new report on the following lines:

CBEC Instructions in F.No. 296/127/2013-CX-9, Dated: October 10 2014

Send Representations only through Proper Channel - CBEC Member

CBEC Member Joy Kumari Chander in a letter to all the Chief Commissioners wants them to advise all officers under their charge to address representations only to the relevant authority who is competent to dispose of the same, and send the same through proper channel.

She informs them that the Board has been receiving a large number of representations directly from officers, without routing the same through proper channel. Advance copies are also being received and it is seen that often these advance copies are also endorsed to various other authorities. Often, therefore, the administration is flooded with 4-7 copies of the same representation received through different routes. This is generating unnecessary work all around starting with entry into the FTS (File Tracking System) as well as handling of many copies by the Sections.

It was only a couple of weeks ago that Board issued similar instructions. (DDT 2447)
Why can't they bar all such representations?

Maybe it is very difficult to discipline senior officers.

CBEC Member's D.O. Letter No. C-50/98-2014-Ad.II, Dated: October 07 2014

Jurisprudentiol - Wednesday's cases

Customs

Import of hospital equipment under duty exemption - Diagnostic centre also eligible: SC

THE Central Government has issued Notification No. 63/88-CUS, dated 01.03.1988 granting exemption to hospital equipments imported by specified category of hospitals (charitable) subject to certification from the Directorate General of Health Services (for short, "the DGHS") to the Government of India. The explanation to the notification reads as under:

"Explanation - For the purposes of this notification, the expression "Hospital" includes any Institution, Centre, Trust, Society, Association, Laboratory, clinic and Maternity Home which renders medical, surgical or diagnostic treatment."

The question before the Larger Bench of the Supreme Court was whether a diagnostic centre would be eligible for the exemption.

Income Tax

Whether interest payment towards delay in paying sale consideration after slump sale is effected and plant is in operation, is to be treated as revenue in nature - YES: HC

THE assessee concern is a joint venture company formed by Sandvik AB Sweden and M/s. Chokshi Tubes Company Limited. The company was incorporated on 20th October 1996 with the share holding of 51% by Sandvik AB and 49% by M/s. Chokshi Tubes Company Limited. M/s. Chokshi Tubes Company Limited was previously having EMD undertaking at Rajpur of Mehsana doing extrusion of stainless steel pipes and tubes. The joint venture company acquired the EMD undertaking of M/s. Chokshi Tubes Company Limited, situated at Rajpur, Mehsana as a going concern on "as is where is basis" and an agreement was made on 4th December 1996 between Sanvik Chokshi Limited and M/s. Chokshi Tubes Company Limited for transfer of EMD undertaking as a going concern at a slump price of Rs.100 Crores. Such amount was paid for acquisition, which included fixed assets, current assets, raw materials, advances, cash and bank balance, liabilities, etc., without bifurcating specifically in the agreement, any asset, raw materials or advances and no separate value for different assets also were determined.

The issue before the Bench is - Whether interest payment towards delay in paying sale consideration after slump sale is affected and plant is in operation, is to be treated as revenue in nature. YES is the answer.

Service Tax

Debit note mentions different amounts in figures and words - Demand raised on difference - no steps taken to verify as to what amount has been paid by service recipient although both under same jurisdiction - Matter remanded for verification: CESTAT

THE brief facts are that the appellant provided certain services to Swan Telecom, Santacruz (E), Mumbai and raised a debit note to the tune of ‘Rs.200,098,500' shown in figures and 'Rupees Twenty four crore thirteen lakh eighty three thousand only' in words. The revenue is of the view that as there is a difference of amount shown in figures and in words of the service provided by the appellant, therefore, they are required to pay service tax on the figures shown in words.

See our Columns Tomorrow for the judgements

Until Tomorrow with more DDT

Have a nice day.

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