TIOL-DDT 92
11 04 2005
Monday
WHAT will the poor assessees do if the officers who are meant to be there to solve their problems themselves create confusion? Most of the Central Excise assessees who are also required to pay Service Tax on goods transport have been paying tax only on 25% of the value in terms of Notification No. 32/2004-Service Tax, Dated : December 3, 2004 and they are right. Now the DG, Service Tax has issued a clarification to all the Chief Commissioners that this exemption is available only if the transport agency pays the tax and not if the consignor or consignee pays it. The learned honourable and totally confused DG does not mention, why he thinks so. The notification does not insist on any such condition. Sadly the DG’s understanding of the notification is different, but the moot question is, what is the DG’s authority for issuing such a clarification? Of course thankfully his clarification is contained in a letter to the Chief Commissioners who have been asked to share this wisdom with their Commissioners. Now the Commissioners or at least their Superintendents will have a lot of explaining to do in the field to convince the assessees that they have to pay tax on the full value and not 25%, because the Honourable DG, Service Tax thinks so. The DG is not the Board and therefore his clarifications are not binding even on the department let alone the assessees. But the field is certainly not going to keep quiet. DDT asked a senior officer who felt that the DG’s clarification is patently wrong whether he was going to implement it. “Of Course, I am”, he said. “But Why Sir?, He is not the Board and you are not bound by his clarifications” , DDT asked. “HE is going to be in the Board soon and that is good enough reason”, was the cryptic reply.
Before the field goes on the rampage, it is hoped that the CBEC will come with a proper clarification. Some time back the CBEC had issued a direction to the Commissioners not to issue Trade Notices. The Board should come with such a clarification that DGs should not give clarifications -especially on important issues like notifications. This should be the exclusive purview of the Board – after all they make these notifications and they know the intention. Further they can obtain the views of the Law Ministry and also amend notifications even with retrospective effect, if necessary. This one small clarification of the DG will result in thousands of Show Cause Notices, if the Board does not come up with an urgent clarification.
Please see an article on the issue by our noted columnists Jai Kumar, Natarajan and Karthikeyan in today’s TIOL SPECIAL
For every problem, there is a solution that is simple, obvious, and wrong
Target Plus Scheme – CBEC issues notification
In a swift move, immediately after the changes were announced in the Foreign Trade Policy, CBEC has come out with a notification granting exemption for goods imported under the Target Plus Scheme, subject to certain conditions.
1. Exemption available only to Star Export Houses on the basis of incremental growth in FOB;
2. exemption shall not be admissible if there is insufficient credit in the certificate for debiting the duties leviable on the goods;
3. the certificate and goods imported against it shall not be transferred or sold: Goods can be used by a supporting manufacturer whose name figures in the licence.
4. Certificate of installation to be produced from Central Excise AC/DC. In case of units not registered with Central Excise, certificate can be issued by Chartered Engineer.
5. ICDs and CFSs added to the list of ports.
6. the importer shall be entitled to avail of the drawback or CENVAT credit of additional duty leviable under section 3 of the said Customs Tariff Act against the amount debited in the said certificate.
NOTIFICATION No. 32/2005-CUSTOMS dated 8.4.2005
Has the Tribunal any discretion to reduce the amount of penalty under Section 11 AC?
The Department’s view is that the penalty equal to the duty under Section 11AC of the Central Excise Act is mandatory and there is no discretion. Though it is nine years since the section came into force, strangely this question is not so far decided by the Supreme Court or any High Court. The famous Escorts JCB case - 2002-TIOL-26-CESTAT-DEL – was all about valuation, but there was a very interesting decision made by the Tribunal in that case. The Tribunal held that the penalty equal to duty is the maximum and not mandatory. It is not mandatory that in all cases such maximum should be imposed as penalty. Authority is having discretion to impose lesser penalty. And the Tribunal reduced the penalty from Rs 30 Lakhs to Rs 10 Lakhs. The party took the matter in appeal to the Supreme Court on the issue of demand and Revenue also took the matter to Supreme Court challenging the reduction in penalty. The Supreme Court allowed the party’s appeal and so there was no demand and consequently no penalty – mandatory or otherwise. Therefore there was no decision on the Revenue appeal. Tribunal continued to hold that mandatory penalty was not all that mandatory. And Revenue is constantly aggrieved. A few reference applications are pending in various High Courts. On the 1st of April 2005, the Supreme Court had another occasion to decide this issue in COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH-I v M/s DABUR INDIA LIMITED. This was also a case where the Tribunal reduced the penalty. The Supreme Court did not find any reason to interfere with the Tribunal’s order and dismissed the Revenue appeal with the remarks, We leave open the question whether the Tribunal has power to reduce penalty to be decided in an appropriate case.
Till then Tribunal will give relief.
See full text of Judgement 2005-TIOL-64-SC-CX-LB
Until Tomorrow with more of DDT
Have a Nice Time
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