¶Two metres of tea please¶ A foreigner on a visit to a South Indian Village saw a tea maker making tea by pouring the tea from one glass to another with both his hands at 180 degrees. The foreigner thought that he was measuring tea, So he came to the shop and asked, ¶please give me two metres of tea¶.

The Customs Tariff (and the CE tariff) has a set unit of quantity for each heading. This was of course not given much importance. The Board in its letter in F. No. 4/7/2005-CX. I, dated 31-3-2005 had observed that as per the Additional Note No. (3) to the CE Tariff Act “the standard unit of quantity is specified for each tariff item to facilitate the collection, comparison and analysis of trade statistics. Thus, standard units of quantity for each tariff item have been specified to facilitate collection, comparison and analysis of trade statistics. These units of quantity are indicative and have not been made mandatory as yet. It would be pertinent to mention here that exactly similar note exists in the 8-digit Customs Tariff also that is in existence since February 2003. It has been gathered from Cus. IV section that declaration of quantity in terms of the said ‘units of quantity’ in the bill of entry/shipping bill has not yet been made mandatory.

But the DG Valuation is not impressed with logic; it is after all the organisation that has to do the compilation. So the DG informs

it has conducted study of usage of different units of quantity. Use of different units of quantity for the same goods has been causing serious problems in data analysis. Very often importers describe the same Unit differently (number, piece, unit, etc.). Unacceptable units like sacks, cartons, bundles are often used in respect of certain goods (Plastic granules, Apples, Carpets etc.). A different kind of units being used for the same goods is another serious problem (eg. Petroleum quantified oil in Litres, Kilo liters, Kg, MT, Drums, etc.). Incomprehensible units are used in some cases ( eg. Number in respect of cloves). These practices make it difficult to do value comparison for such kind of goods. Data analysis and Risk Management also will run into difficulties due to such inconsistent use of Units of quality.

The DG further informs that

In the recent conference of Chief Commissioners presided over by the Member Customs) CBEC held on 01/10/2005, it was decided that all the Customs stations should take action to implement the Standard Unit of Quantity prescribed in the Customs Tariff within a period of three months.

The minutes of the conference reads as,

It was noted that the use of different Units of Quantity for the same item was also creating serious problem both in imports and exports. In fact the statistics on exports reveal that after the withdrawal of the quota regime the export figurers show less quantity compared to the previous period, and it was found to be due to the wrong use of Units of Quantity. The need for Standard Units of quantity was, therefore, emphasized both for imports and exports. In this connection it was recalled that the Board had issued a Circular No.51/2002 dated 14.6.2003 regarding the need for following the prescribed units of quantity. But it has not been implemented strictly by the field formations. It was, therefore, stressed that the Chief Commissioners concerned should take immediate action for enforcing the Standard Units of quantity. In many cases although the Custom House had issued Public Notices in this regard, it was not enforced. There is a need to have a strict enforcing of Standard Units of Quantity within a specified time frame for a purposeful application of the NIDB data, particularly in the context of implementation of the Risk Management Module.

Decision :-

(a) In respect of imports, all the Customs stations should take action to implement the Standard Unit of Quantity prescribed in the Customs Tariff within a period of three months.

(b) In the event of non-compliance by the importers, the assessing officers would be entitled to raise query and not clear the Bill of Entry till the requirements of Standard Units of Quantity are complied with. 

(c) In respect of exports, the date for enforcement will be decided by the Board in consultation with the Ministry of Commerce.

So within three months the Board wants the unit of quantity norm to be implemented and that is by 31st January 2006 and so far nobody knows a thing about this. Will the Customs seize goods if the correct unit of quantity is not shown in the Bill of entry? And why is the Board shy of issuing a public circular? Circulars from the Board and other dignitaries like DGs have been open to severe criticism especially in these columns and now they have the Ostrich for a model. Instead of open public circulars, they are issuing secret instructions to the field. A law that is meant to be known only to the enforcers and not to the ones who are supposed to obey it is not a good law. To keep instructions secret because they are open for criticism is simply childish and does not behove well for the premier revenue collecting agency in the country, especially when we talk a lot about Right To Information.

Truth as defence against contempt of court?

Satyameva Jyate! Not in Contempt - if you choose to criticize their lordships! The former CVC, Vittal said, ¶So far as Judiciary is concerned, the shield of 1971 Contempt of Court Act protect them. Any attempt at even making objective criticism runs the risk of person making the comments being hauled up for Contempt of court. Truth is no defence against Judiciary¶ All this is going to change with the cabinet approving the amendment to the Contempt of Courts (Amendment) Bill 2004. Section 13 of the Act is proposed to be changed to

“13. Notwithstanding anything contained in any law for the time being in force,—
(a) no court shall impose a sentence under this Act for a contempt of court unless it is satisfied that the contempt is of such a nature that it substantially interferes, or tends substantially to interfere with the due course of justice;
(b) the court may permit, in any proceeding for contempt of court, justification by truth as a valid defence if it is satisfied that it is in public interest and the request for invoking the said defence is bona fide.”

Targets in the new LTU Era

As the Financial year closes, normally there will be hectic activity at the Commissionerates. Several reports and brochures analyzing the revenue from various angles are prepared and submitted to the bosses. Tons of papers and hundreds of man-hours are spent on this single activity called revenue performance and reaching the targets. The atmosphere in the revenue meeting will be charged and the senior officers often try to find out ways and means to satisfy their bosses about their revenue performance.

But, is all this going to change from 1st April 2006? LTUs are going to be opened in the Metros from the next financial year. Under this, the top assesses can choose to pay tax and file returns at their head offices instead of having multiple registrations at different locations. So though the manufacture and clearance takes place in one Commissionerate, the revenue will be realized in another.

We already have Centralised registration for payment of Service Tax under which, though the service is rendered at different places, the tax payer can choose to pay at a Central office. As per the statistics, in 2004-05, the five Metros contributed 64% of the revenue from Service Tax. The remaining Commissionerates contributed only 36% of the Service Tax revenue. It doesn’t mean that they are not doing well, but due to Centralised registration at Metros, the revenue is accounted there though the actual service is rendered elsewhere.

But, as old habits die hard, the above logic has little impact on our tax administrators and it is learnt that there are some serious reviews of revenue performance on service tax front. The targets are fixed for the Commissionerates and the growth rates are compared vis a vis national growth rates and are seriously followed.

Coming back to LTUs, once the manufacturer shifts the payment of duty from a Commissionerate to a Metro, there may be serious objection from the jurisdictional Commissioners who are very much concerned about the revenue! ( of course from their Commissionerates). At any cost they may resist the tax payer from exercising his option to join the LTU scheme. So there may an inbuilt resistance from the Senior officers which our FM needs to give attention to and it may not be surprising if at the end of the day we find not even one from his projected 582 entities join this mega scheme.

Real charity doesn't care if it's tax-deductible or not

Until Monday with more DDT in the New Year

Have a nice Weekend.

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