TIOL-DDT 1022
31.12.2008
Wednesday

Board has come to know that:-

1. 'Combined refrigerator freezer fitted with separate external doors' are being classified under the Tariff Item 8418 21 00 on the premise that these goods are household type refrigerators.

2. Accordingly, duty concession applicable on goods of Tariff Item 8418 21 00 under Sl.No.50 of the notification No.85/2004-Customs is also being extended to such imports from Thailand under bilateral trade agreement. Certain other Customs field formations have also raised doubts about this classification and sought a clarification from the Board.

Board has examined the issue and observed:-

1. Sub-heading 841810 covers refrigerators which are combined with freezers and have separate doors,

2. Sub-heading 841821 covers only refrigerators without separate freezers and separate doors.

3. Sub-heading 8418 30 covers only "freezers".

4. Therefore, a 'Combined refrigerator freezer with separate external doors' merits classification under sub heading 841810.

5. This view is also supported by HS classification.

6. Further, 'Combined refrigerator freezer with separate external doors of household type' is appropriately classifiable under tariff item 8418 10 90, as the other tariff entry at 8418 10 10 covers such refrigerators of commercial type only.

So, Board clarifies that the classification of 'Combined refrigerator freezer with separate external doors' would be under sub- heading 8418 10 and not under 8418 21, as was being followed by certain Customs field formations. Accordingly, these goods are not covered under Sl.No.50 of the notification No.85/2004-Customs dated 31.8.2004.

Board wants action for review of classification and applicability of notification benefit in respect of past clearances to be initiated so that differential duty, if any, could be recovered for the past period.

Now what? Show Cause Notices alleging suppression and evasion?

CBEC Circular No.23/2008-Customs; Dated: December 29, 2008

Customs Refunds - Pre-audit of Refund Claims - CBEC clarifies - patently illegal?

Board had issued detailed instructions on sanction of refunds of Customs Duty by Circular No. 24/2007-Cus dated 02.07.2007. It was instructed that all applications involving a refund of duty and/or interest of Rs. 5 lakh or more shall be subjected to pre-audit as per the existing practice.

However, It has been brought to the notice of the Board that the circular does not clearly state whether the pre audit of application of refund for amount Rs. 5 lakh and above should be done at the level of DC/AC or at the level of Commissioner.

Board now clarifies:-

Pre-audit of all refund claims will be conducted by the Assistant/Deputy Commissioner (Audit), in the Commissionerate Headquarters Office. Thereafter, the Assistant/Deputy Commissioner of Group/Division will pass an order-in-original in respect of the claim. Thereafter, the orders-in-original passed in this regard shall be subjected to review by the Commissioner concerned.

Patently illegal? Why all this complication? One AC receives the refund application and sends it to another AC for pre-audit - waits for the report from that AC and then he should pass an adjudication order. Is he bound by the observations of the Audit AC? What happens if the Audit AC is junior to him? (This is not a small problem - government runs on seniority ego).

Now what happens if the refund AC takes a different view? Is he supposed to allow the refund or not? Why can't the AC (refunds) simply process the claim and decide and then the Commissioner can review the order if he wants to?

In some Commissionerates, as there is only one AC in the Head Quarters and he cannot pre-audit his own files of refund, the pre-audit is conducted by the Additional/ Joint Commissioners. Can any AC pass adjudication orders against the views of his seniors officers? Is it not gross interference into quasi judicial functions of the AC?

Is the pre-audit another channel for slush money? Even the assessees are clever; they file refund claims of less than Rs. 5 lakhs to avoid pre-audit and sometimes the refund section officers advise them to bifurcate or trifurcate refund claims so that each claim is for less than Rs. 5 lakhs and need not go for pre-audit.

Recently it has come to our notice that an AC issued a SCN to an assessee that it has filed five refund claims to avoid pre-audit and add to his work.

Actually there is no need for this Audit - pre or post. We now have a perfect review system in place where invariably every order of the lower Authority is reviewed by the staff of the Commissioner, which is actually much better than the pre and post Audit.

What happened is a historical confusion. All payments made by the Department are subject to audit and every Commissionerate has a CAO and PAO for the job. The PAO is from the Principal Chief Controller of Accounts and is the guardian of the government funds and all payments including duty refunds were audited by him from an Auditor's point of view. Somewhere down the line they thought that this Audit has to be done by the AC (Audit) in the Commissionerate and the PAO got eliminated and the AC (Audit) took his place, though they are expected to perform different kinds of audit.

This pre-audit by the AC(Audit) is patently illegal as held by the Bombay High Court in Bombay Chemicals Ltd vs Union of India - 2005-TIOL-236-HC-MUM-CX.

Any continuation of such practice would attract contempt proceedings. We had suggested so in TIOL-DDT 512 - 14.12.2006.

We hope the Board will listen.

CBEC Circular No. 22/2008-Customs; Dated: December 19, 2008

Car with Beacon and Government logo of Pune IT Commissioner - Police not impressed

The status of a Government officer is made known to the public through a red beacon atop his car and the Government's logo. Babus were prepared to travel in rickety old Ambassador cars as long as the cars had the beacon - the symbol of the might of the SARKAR.

Recently the Government had allowed the babus to hire private vehicles for their official purposes. They have hired fancy jumbo cars but they can't let go of the beacon and the logo. Many of these private hired cars proudly sport these beacons and government logos. We recently asked a Customs Commissioner why his hired limo sports the beacon and logo - he told us that the taxi fellow have them to avoid police harassment.

But the Pune Police was not impressed. It seems yesterday they stopped a private vehicle carrying the Income Tax Commissioner and fined the driver Rs. 100/- for carrying the beacon and the logo.

This is a country where pomp and power are respected. Incidentally the Prime Minister of India still travels in an ambassador car - after all he need not show off.

Jurisprudentiol- Tomorrow's cases

Central Excise

Department's appeal - Can Commissioner directed by Board to file appeal validly authorize Superintendent to present such appeal and, will appeal be maintainable? - Matter remanded to decide whether Superintendent filed or presented appeal: Gujarat High Court

THE Tribunal has used the terms 'file' and "Present" an appeal by equating both the terms and interchanging the same without realizing that the two terms inherently have different connotation and cannot be either equated or interchanged.

Income Tax

Income tax - intimation u/s 246 is appealable; If any assessee, under a mistake, is over-assessed, Revenue is required to assist him and ensure that only legitimate taxes are collected: Bombay HC

IT is true that there is no inherent right of appeal to any Assessee and it has to be spelt out from the words of the statute, if any, providing for an appeal. But it is an equally well settled proposition of law that, if there is a provision conferring a right of appeal, it should be read in a reasonable, practical and liberal manner.

FERA

Retracted Confession as evidence - burden is on prosecution to show that confession is voluntary in nature and not obtained as an outcome of threat, if the same is to be relied upon solely for purpose of securing a conviction: Supreme Court.

WITH a view to arrive at a finding as regards the voluntary nature of statement or otherwise of a confession which has since been retracted, the Court must bear in mind the attending circumstances which would include the time of retraction, the nature thereof, the manner in which such retraction has been made and other relevant factors. Law does not say that the accused has to prove that retraction of confession made by him was because of threat, coercion, etc. but the requirement is that it may appear to the court as such. The question of the appellant's failure to discharge the burden would arise only when the burden was on him. If the burden was on the revenue, it was for it to prove the said fact.

Just a Second please

Every Second counts - and as you celebrate the New Year Eve, be happy that this year you have a little more time to enjoy - one second to be precise - a leap second is to be added to 2008.

See our columns tomorrow for the judgements

Until tomorrow (next year) with more DDT

Have a nice Day.

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