Indian Tax Solution
CBEC: The law is an ass & cheating the hallmark of Indian bureaucracy-Part 2
In the first part, it was crystal clear that how very easily; the policymakers are able to get away with the blatant lies & bulldozing the users of the system. The policymakers can indulge into the contempt of the Parliament/legislature without any fear of any sorts. The policymakers are least bothered about what havoc is created by them. If this is the way the cheating takes place then the nations can go down the drain because under these circumstances, only cheats can thrive & those who comply with the law will be left to bear the brunt of it. In today’s context, the Sahara Chief was summoned to the Apex Court to explain the refund of thousands of Crores in cash without placing the evidence on record but then the bluff has gone too far. This is the case in respect of the Transaction Value administration by the CBEC. If the policeman does not register an FIR or botches the prosecution then the SC says they need to be taken to task. Why then the policymakers are not held accountable for making the law in an easy to understand manner & administer the same in a transparent manner. The character/conduct of the government will be reflected in the citizens of the country because together they make the nation therefore it is a very serious issue.
This 2nd part of the story deals with the issue of CBEC circular by way of which the issue of Transaction Value when order is placed on composite price basis is clarified in terms of the interpretation of the law & implementation thereof. The CBEC officials have taken a view in this matter as per the internal document of the CBEC wherein it is stated in a crystal clear manner that from the composite price only the taxes & duties can be deducted to arrive at the Transaction Value. This effectively means that outward handling i.e. freight & insurance cannot be deducted from the transaction value & precisely this aspect has been addressed in the circular in terms of the law. When this internal note of the CBEC is on record then how can the CBEC deny the existence & cheat the assessees.
In the 1st part of the story, the information asked under the RTI Act in respect of the Act of the Parliament was narrated to show that how the CBEC is out rightly cheating the Indian citizens by distorting the transaction value. In this part we talk about the CBEC circular & just see the irony that a circular is issued for the correct implementation of the law, the same is issued by the CBEC but the CBEC still maintains that the information is not available with them. It is left for the readers to judge that can this cheating be acceptable?
The RTI application requested the following information:
Please refer to circular issued from F. No. 6/59/2000-CX. 1, dated 19-12-2000. It contains the following:
It has been brought to the notice of the Board that some manufacturers of telephone cables who are clearing goods on the basis of the composite price are taking abatement/deduction of the freight which is included in the composite price like central excise duty, sales tax etc. in contravention of Board Instruction No. 354/81/2000-TRU, dated 30-6-2000.
The orders are placed on the basis of composite price on everyday basis therefore the law is required to be implemented in case of all removals therefore please do not say that there is no information in the law.
Now, please provide the following information:
1.Please let me have the information that what is meant by the composite price in the circular issued from F. No. 6/59/2000-CX. 1, dated 19-12-2000.
2. Please let me have the information that what can be excluded from the composite price to arrive at the transaction value in terms of circular issued from F. No. 6/59/2000-CX. 1, dated 19-12-2000.
3. Please let me have the information that whether freight & insurance can be excluded from the composite price to arrive at the transaction value in terms of circular issued from F. No. 6/59/2000-CX. 1, dated 19-12-2000. If the answer is yes, please provide the exact details of the legal provision.
4.The foreign buyer places export order on the Indian manufacturer for supply of goods on CIF Dubai basis. Therefore the CIF Dubai price is composite price specified in the export order. Please let me have the information that whether this composite price in terms of the S 4 (d) of the Central Excise Act,1944, is the transaction value for the purpose of the payment of duty. If the answer is No then please provide the details of the underlying legal provision.
5. Please let me have the information that whether freight & insurance can be deducted from the CIF Dubai price to arrive at transaction value for the purpose of the payment of duty? If the answer is negative then please provide the exact details of the legal provision.
6. Please let me have the information that whether freight & insurance is directly/indirectly related to the sale of goods in case of CIF contract & therefore part of the transaction value on which the duty has to be paid in terms of the S 4 (d) of the Central Excise Act,1944.
7. Please let me have the information that under CIF Dubai export contract what is the place of removal when the goods are removed under ARE-1 for export under the cover of export invoice showing the details of the foreign buyer.
Thus from the contents of the RTI Application it is crystal clear that the CBEC has examined the issue of composite price & the Transaction Value & issued a circular to implement the law correctly, which is binding on the department & required to be implemented by the field formations in respect of each & every removal from the manufacturing facility but then what is the reply of the CBEC to the information is not only shocking but disgusting & shameful.
The reply of the CPIO, CBEC reads as under:
The CPIO has denied the information saying that the information sought by the appellant is in the form of view or opinion or the interpretation & not the facts , the same cannot be provided relying on the decision of the CIC vide F. No. CIC/AT/ 2006/00045/ dtd. 21.4.2006 wherein it is held that the RTI act does not cast on the public authority any obligation to answer queries.
However, any person with common sense will very well understand that reply of the CPIO, CBEC is a blatant attempt to avoid giving the requested information. There are four very significant aspects related to this RTI reply.
A.CBEC has issued circular to ensure strict compliance of the C. Ex. Act in respect of the Transaction value in relation to the composite price on which the orders are placed by the buyers.
B. The Supreme Court in the case of?Ranadey Micronutrients?v.?Collector of Central Excise?(supra) held that the whole objective of issuance of circular by the Board is to adopt a uniform practice.
C. The field formations are bound by the C. Ex. Act & the CBEC circular therefore there is no way that the information requested by the applicant can be denied.
D.?The CVC has issued guidelines to curb corruption under Section 8(1)(h) of the CVC Act, 2003 to bring about greater transparency and accountability in the discharge of regulatory, enforcement and other public dealings of the Government organizations therefore it is difficult to understand that why the CBEC circular is being denounced by the CPIO as being worthless.
Now, we deal with the issues in respect of the specific information request:
1.The query No. 1 pertains to question of law that what is meant by the Composite price. The Field formations are required to deploy the composite price by deducting applicable taxes & duties to arrive at the transaction value to collect applicable duty. There are several thousands clearances taking place on everyday basis therefore there is no way that this information can be denied by the department because if this information is not available that what is the composite price then how the binding CBEC circular can be implemented. Therefore, there has to be application of mind in understanding the information request so as to give a proper reply. The CBEC, CPIO cannot say that CBEC/TRU is unaware of composite price & the same is wrongly used in the circular & the circular has multiplied confusion.
2.The query No. 2 pertains to question of fact that what can be deducted from the composite price to arrive at the transaction value. The CBEC circular provides exact information in respect of the deductions allowed therefore the information cannot be denied. There is no interpretation possible in this matter as per the harmonious reading of the law. Therefore, the CPIO needs to provide the exact details as called for. Please note that it is preposterous to say that CBEC circular is superfluous & does not contain the information about deductions from composite price to arrive at transaction value.
3.The query No. 3 pertains to question of law that whether freight & insurance can be deducted from the composite value to arrive at the transaction value & if the answer is yes then what are the applicable conditions. Since every clearance involves assessment of transaction value there is no way that the department can function without this information. There is no interpretation possible in this matter as per the harmonious reading of the law. Therefore, the CPIO needs to provide the exact details as called for. Please note that the CBEC circular deals with this specific information only & this is clear to any sane person therefore the CPIO is indulging into harassment by not giving the requested information. Is the CPIO trying to say that the CBEC is indulging into making a fool out of the citizens of this country by issuing circulars, which do not provide any clarity!
4.The query No. 4 pertains to question of fact that how the transaction value is to be arrived? The CBEC is bound to implement the s 4 (d) of the C. Ex. Act therefore the CBEC cannot abscond from the responsibility of giving the information that how the Act of the Parliament is being implemented. The CBEC cannot abdicate the responsibility of telling the assessee the transaction value as explained in the circular in itself. The CBEC has explained in detail the composite price & the deductions to arrive at transaction value so that there is absolute clarity & the assessee do not suffer. Therefore it is difficult to comprehend that how can this information be ever denied under the RTI Act. The same applies to query No. 5 also.
5. The query No. 6 is a question of law, reply to which needs to be available for the law to be implemented by the field formations. The information sought is whether freight & insurance is directly/indirectly related to the sale of the goods & therefore includible in transaction value in terms of S 4 (d) of the C. Ex. Act, 1944. The field formations are required to implement the Excise Act & transaction value in respect of each & every clearance therefore there is no way that compliance can be there without knowing what is to be implemented? It is difficult to understand that why the CPIO is so afraid of even giving proper reply in respect of the most basic requirements of the law.
6. In respect of the query No. 7, it is requested that the place of removal of the goods should be specified when the goods are removed under the cover of ARE-1 for the purpose of exports. Please note that there can be nothing preposterous than this that the CPIO is not in a position to even give this information? The CPIO is not put in place to harass the applicants but to give information. There is an excise Invoice & ARE-1 prepared for the removal of goods for export then can any sane person claim that the place of removal of the goods is unknown. It is difficult to understand that if the CPIO does not have such basic information then why should he be tolerated in the department & allowed to continue so as to harass the applicants. Such brazen attempts to make the life miserable for the RTI applicants need to be dealt with strictly so that the harassment stops. Please note that the place of Removal is specified in the C. Ex. Act in itself therefore the information cannot be denied.
As pointed out in the 1st part of the story, any public authority shall provide reasons for its administrative or quasi judicial decisions (S 4 (1) d) of the RTI Act) & also provide all relevant facts while formulating important policies or announcing the decisions (S 4 (1 ) c ) of the RTI Act); the CIC has oft repeated that giving information is the rule so as to infuse responsibility & accountability; the C. Ex. law also contains the provision to the effect that if the applicant approaches them for clarification then the department is required to provide the same. Thus any way you look at it, the CPIO is legally bound in terms of the law to provide the requisite information.
The height of stupidity has no limits & duty is collected by the CBEC on transaction without knowing what the transaction value is in respect of all the removals/goods sold by any manufacturing facility in India because?the law is an ass & cheating the hallmark of Indian bureaucracy. However, this is not the end of the story. In the 3rd part, we reveal that how the GOI/CBEC is trying to short change the exporters by literally robbing them of their legitimate entitlements. The issues have been raised to the attention of the highest authorities & justice is awaited. These authorities cannot take the position that the courts need to decide because the courts have despised that attitude & if they do not then what is the use of these white elephants, who are not able to do anything properly but create only rent seeking opportunities only in the rotten system.