05.08.2014
Tuesday
THE story of a huge litigation generally starts with a Show Cause Notice in Customs/Excise/Service Tax. Usually the Show Cause Notice is the result of an audit or investigation by the preventive unit. The Audit objection or the preventive intelligence is often approved by the Commissioner and the Commissioner himself issues the Show Cause Notice under his signature. And then he sits in judgement over the initial findings approved by him and the notice issued by him - as the adjudicator. So, un-understandably by any normal citizen, the Commissioner is the policeman, prosecutor and the judge. But that is the accepted adjudication system in the Department - but the two premier investigating agencies of the Department, DRI and DGCEI do not adjudicate - they leave that job to the jurisdictional Commissioners, almost always ensuring hundred percent success.
In DDT 444 - 07 09 2006, we raised a question as to whether DRI can adjudicate and if they can, why they don't? Of course later it was realised that DRI does not have even the power to issue Show Cause Notices for demanding Customs duty. The Supreme Court in the case of Sayed Ali - 2011-TIOL-20-SC-CUS held,
"it is only the officers of customs, who are assigned the functions of assessment , which of course, would include re-assessment, working under the jurisdictional Collectorate within whose jurisdiction the bills of entry or baggage declarations had been filed and the consignments had been cleared for home consumption, will have the jurisdiction to issue notice under Section 28 of the Act".
Lo and behold! All the Show Cause Notices issued by DRI, suddenly became illegal. A panicked Board by Notification No. 44/2011-Cus(NT) dated 06.07.2011 notified DRI and DGCEI officers as Customs Officers for the purpose of Section 17 and 28 of the Customs Act. That gave them powers from 06.07.2011, but what happened to all the Show Cause Notices issued earlier? They remained illegal and void. We reported this in DDT 1647-08.07.2011 and commented that this will be one of the retrospective amendments in the next budget.
But the Government did not wait till the next budget. By the Customs (Amendment and Validation) Act, 2011, enacted on 16.09.2011 the Section 28 of the Customs Act was retrospectively amended to insert a new clause,
"(11) Notwithstanding anything to the contrary contained in any judgement, decree or order of any court of law, tribunal or other authority, all persons appointed as officers of Customs under sub-section (1) of section 4 before the sixth day of July, 2011 shall be deemed to have and always had the power of assessment under section 17 and shall be deemed to have been and always had been the proper officers for the purposes of this section."
So, all the invalid Show Cause Notices issued by the most powerful investigating agency were retrospectively made valid.
But the DRI and DGCEI still hesitated to adjudicate - they continued to leave that job to the jurisdictional Commissioners and very few Commissioners had the guts to drop a Show Cause Notice issued by DRI, not that they dropped other Show Cause Notices.
Now, perhaps all this is going to change. In the recent allocation of cadre strength as reported by DDT yesterday, the Board has allocated two Commissioners (Adjudication) each for DRI and DGCEI. So, perhaps there will be two Commissioners exclusively for adjudicating DRI cases - it is not known where they will be sitting - Perhaps they will go on excursions all over the country. And maybe now even lower level officers of DRI like Additional Commissioner and Assistant Commissioner will also adjudicate cases. This makes the policeman, prosecutor judge combination perfect and complete. Anyway the assessees have nothing to lose as all the notices (especially the DRI ones) are routinely confirmed.
Please also see DDT 444 - 07 09 2006 ; TIOL-DDT 1597 28.04.2011 , TIOL-DDT 1647 08.07.2011 and TIOL-DDT 1657 22.07.2011 and DDT 1701-27.09.2011for more on this.
Who are in rest of army?
YESTERDAY DDT reported that CBEC will have a staff strength of about 85,000 personnel and we gave details of the number of officers from Inspectors to Principal Chief Commissioners who constituted about 50,000 employees. Advocate Gururaj is curious to know as to who the 35000 plus other employees are!
Sir, this huge army also consists of:
• About 2300 stenographers who are called by various names like Steno-I, Steno-II, PS and Sr. PS;
• About 2000 Administrative officers;
• About 100 translators;
• About 14,000 clerks designated as LDC, TA, EA;
• About 1400 drivers*;
• About 15,200 Havaldars
That makes it about 35,000 who are all paid from the taxpayers' money.They also include some Assistant Programmers, sepoys, ASI (weapons), Lady Searchers, ASI (Dog Handlers) and maybe Gestetner operators etc
Don't be surprised that there are only 1400 drivers. Drivers and vehicles were considered the biggest liability for the department. So, they are perhaps trying to dispose of both. A CESTAT President once caught his driver transferring petrol from the Government car into the driver's motorcycle through a pipeline! Now all the senior officers are allowed to hire cabs and so you can see even junior level officers flaunting fancy cars - at Government expenses - about forty thousand rupees each a month.
Good Luck to more governance.
India is powerful to resist WTO - Trade Facilitation - Pak Newspaper
THE Pakistani Newspaper ‘The News International' editorially commented yesterday;
"The US is displeased with India for blocking an initiative at the World Trade Organisation to streamline customs procedures. India has said it will only agree to the measure if it is accompanied by a parallel agreement allowing it to stockpile and subsidise grains. The move is something of a U-turn by the neo-liberal Modi, who had criticised the Congress government for implementing a similar food security law, and he has obviously angered the Americans. That India is powerful enough to resist such efforts should be welcomed."
The newspaper mentioned some other US-India issues and commented, "Modi struck another important blow against the US by criticising the surveillance regime the superpower maintains around the world…. None of these issues, however, mean that the burgeoning alliance between the US and India has met anything other than a temporary speed bump. Modi will likely meet President Obama at the UN soon and the two countries are so intertwined on matters of trade that any problem will remain a minor impediment."
The newspaper earlier reported a US State Department official as saying, "Failure to sign the Trade Facilitation Agreement sent a confusing signal and undermined the very image Prime Minister Modi is trying to send about India."
But India received unexpected support from a UN agency. International Fund for Agriculture Development (IFAD) President Kanayo Nwanze said, "Creating jobs for some other country, while people are still hungry, doesn't make sense... If I was in the position of feeding my own family or creating jobs for someone else, what would I do? What would you do? …. The bottomline is that every government has the responsibility to ensure that it can feed its own people…" IFAD is an agency of the United Nations, established as an international financial institution to finance agricultural development projects for food production in the developing countries.
Yesterday Finance Minister Arun Jaitley said that he was not against the WTO Trade Facilitation Agreement, but was only against the limit of 10 percent for food subsidy, which is not possible in India as the Indian farmers had to be given a support price. He said that agriculture was heavily subsidised even in US and Europe.
Sunday is not a Day for Judicial or Legal Proceedings
CAN a court sit and pass a judgement on a Sunday?
This was a question before the Allahabad High Court recently. The High Court had to decide whether the Rent Control and Eviction Officer was competent to hold court on Sunday and pass the impugned order.
The High Court observed,
The maxim DIES DOMINICUS NON EAST JURIDICUS means Sunday is not a day for judicial or legal proceedings. It is a day, which has been reserved for divine service from times immemorial. Therefore, as of practice ordinarily no judicial work or act is done on Sundays though ministerial acts may be performed or the lawmakers may occasionally sit and make laws even on Sundays. The above practice in principle has always been, and still is, law except, if otherwise provided by the Statute.
The above principle is not absolute and may not be applicable to the extraordinary jurisdiction exercised by the courts for protection of the fundamental rights of the citizens or any other legal right. It may also not apply where the courts for reasons to be recorded are of the view that any delay on its part would defeat the interest of justice.
Thus, the order dated 17.9.1995 (Sunday) passed by the Rent Control and Eviction Officer cannot stand in law for a minute.
Jurisprudentiol – Wednesday's cases
 Customs
Export of Indian currency in excess of Rs.5000 without RBI nod - general principle is that on whose possession goods are found then that person is to be owner of goods - Commissioner to release the currency on payment of RF of 10% of currency seized and on payment of penalty: CESTAT
ON an intelligence, the appellant, a native of Malapuram District, Kerala, was intercepted at the Sahar Airport , Mumbai on 08.12.2004 and during search, Indian currency of Rs.24,17,500/- was found with the appellant which was not declared or permitted by RBI for export.
Therefore, proceedings were initiated and the Commissioner of Customs (Airport) vide order dated 24.10.2007 ordered absolute confiscation of Indian currency and also imposed a penalty of Rs.2 lakhs.
Income Tax
Whether refund claim is to be allowed to an assessee consequent to an order passed in appeal irrespective of whether fresh assessment order has been passed by AO or not - YES: HC
THE assessee a company had duly filed its return declaring total income to a certain extent. The AO however, assessed the assessee's income to a greater extent and raised a further tax demand of such amount inclusive of interest. Being aggrieved, the assessee preferred an appeal against the order of the AO to the CIT(A). In the mean time, the assessee in consequence of the assessment order deposited some amount and the AO suomoto adjusted the refund due to the assessee for the earlier A.Ys to the extent of remaining amount against the total dues payable for the A.Y in question. In the result, the assessee had deposited with the Revenue an amount/ pending the disposal of its appeal by the CIT(A).
The issues before the Bench are - Whether refund claimed by the assessee could be granted only on a fresh assessment u/s 240; Whether refusal of assessing officer to grant refund to the assessee on ground of pendency of final assessment order would amount to collection of taxes without the authority of law and Whether a refund claim is to be allowed to an assessee consequent to an order passed in an appeal irrespective of whether a fresh assessment order has been passed by the AO in this regard. And the verdict favours the assessee.
Central Excise
Construction activity is service activity and there is also Service Tax levy, therefore, sale to such builders/developers would certainly qualify as sale to institutional consumers - Cement in 50 kg bags sold to builders/developers etc. are not required to be affixed with MRP under Packaged Commodities Rules - demand of 47 crores set aside: CESTAT
THE appellants are manufacturers of cement. There is a statutory requirement to affix MRP on packages sold to dealers for further sale to consumers in retail under the Legal Metrology (Packaged Commodities) Rules, 2011 and which the appellants have complied with.
The appellants have also cleared cement in 50kg bags to various bulk consumers like, builders/developers/industrial users, who use the cement for construction purpose or as raw material. Such buyers are covered by the definition of ‘industrial consumer' or ‘institutional consumer' under explanation to Rule 2A of PC Rules, 1977 and Rule 3(ii) of PC Rules, 2011. As per these provisions, commodity meant for industrial consumer or institutional consumers are not required to be affixed with MRP. Accordingly, the appellants have not declared the MRP on the cement bags and specifically have declared on the packages - "Not for Retail Sale - meant for industrial consumer/institutional consumer/RMC consumption".
See our Columns Tomorrow for the judgements
Until Tomorrow with more DDT
Have a nice day.
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