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BSSIA/306/2002 Date:- 13-11-2002
To,
Mr. Jaswant Singh
Hon'ble Finance Minister
Government of India
New Delhi - 110 001
Dear Sir,
VIEWS ON RECOMMONDATION OF INDIRECT TAXES.
As we are more concerned with the un-organised Sector, Commonly known or described as Small Scale Sector and the Task Force has referred about Duty Exemption under Para 3.6, we putforth here our views hereunder:-
1. STATISTICS ABOUT SSI UNITS -
We are more than 100 lakh units and not 40 Lakh Units spread all over the Country. They Categories in the following:-
A). Cottage Industries, such a potters, Biri Manufacturers, Traditional Industries run by Artisans, Village Industries being run under Khadi & Village Industries Commission, State Khadi & Village Industries Board.
B). Self Employed Technocrats, such as die making, Electroplating, Anodizing Heat Treating, Photography, Printing Screen Printing, Tinning, Galvanizing, Painting, Tailoring, re-packing etc. etc.
C). Hand looms and Power Looms
D). Seasonal Industries such as Silk Worm & Cocoon rearing, Assembly of room Cooler, Air Conditioners, Assemblies, Eri Silk Spinning, Monga Silk Spinning, Tusser Silk Spinning, Bee Keeping etc.
E). Modern Industries such as moulding of Articles of Plastics, Articles of Rubber, Articles of Wood, Articles of Paper & Paper Board, Articles of Iron and Steel, Articles of Non-ferrous metals, Articles of other base metals, Components of Machineries, Components of Automobiles, Components for electrical Industries, Components for electronic Industries, Components for Ship buildings, Components of Air Crafts, Components for Railways, Components for Arms and Ammunition, Components for Pharmaceutical Industries etc.
F). Finished Goods like Bicycles, Tri-Cycles, Locks, Cup Board, Wooden Furniture, Steel Furniture, Name and Number Plates, Scientific and Laboratory Instruments, Laboratory Glassware, Household Glassware, Grinder Mixers, Kitchen aid equipment, Electrical Accessories, Surgical Equipment and Surgical Implements, Writing Instruments, Leather Goods entertainment electronic products, Apparels, Umbrellas Toys, Soaps, Laundry Soaps, Cosmetics Goods, Beauty Aids, insulated Cables, Wires and Wire Rods, Blinds Candles, Spectacles, Agarbathis. Scissores, Sweets, Brooms, Vacuum Flasks, Cigarette and Domestic Lighters, Tailors dummies, Sports Goods, Wheeled Toys, Dolls, Games, Patient Trollys, Stretchers, Incubators, Medical, Tablets, Orthopaedic Tables, Surgical Instrument Cabinets, Hospital beds, Post Mortem Tables etc.
G). Food Products - Such as Sweets, Ketchup's, Milk Products, Beverages, Prasad or Prasadam etc etc.
H). Recording System, Software - Such as recording of Songs Pictures on Magnetic Tapes.
I). Assembly and designing of various products at site.
It is very unfortunate that Economist and the bureaucrat only count the Unit located in Urban area, who had registered themselves to obtain loan from State Financial Corporations, or to obtain a Telephone Connection on priority, or to obtain a Import licences for importing raw materials, components or to get free tender from Government Agencies and compete with Traders for supplying Goods to BARC, Electricity Boards, Railways, Defence, ONGC, Post & Telegraphs department BSNL, VSNL, MTNL, etc etc. Such Industries may be about 40 Lakh. All these 40 Lakh Units are as one part of SSI Sector and do not represent fully.
J). All the Medium Scale Units, who are having Carry On Business (COB) and whose Investment was more than 5 Lakh in Fixed Investment in Plant & Machinery but less than the limit prescribed for Large Scale Units in the year 1973 and till the Limit has been enhanced to rupees Three Crore in the Fixed Investment in Plant Machinery are also treated as Small Scale Undertakings and Ancillary Undertakings. They may not having registration as Small Scale Industrial Undertakings, as running a SSI Unit does not require registration from the State Government directorates. They are exempted from the provisions of registration under Industries, (Development & Regulation) Act, 1951, Since 1951.
1.1) The Development Commissioner (SSI) Ministry of SSI, Government of India have no authority to grant registration under Industries (Development & Regulation) Act, 1951 (65 of 1951). It's Share is as high as 80% in National Export and not 34 % as projected. More than 50% is share in GDP.
1.2) PAYMENT OF EXCISE DUTY PAID BY SSI UNITS NOT RECOVERED FROM CONSUMERS -
The 45% revenue Contribution to the Exchequer under Central Excise comes from this Sector alone. The Central Excise is a Indirect Tax of Revenue receipt and not a Direct Tax. Balance 55% Central Excise duties are contributed by 120 millions Citizens, who smoke Cigarettes, Biris, use Two Wheeler, Three Wheeler, and other Automobiles, use Petroleum Products like Motor Spirit, High Speed Diesel, Furnace Oil, use Allopathic Property Medicines, Branded Goods marketed by the Multinationals and Corporate Sector Merchants/Traders members of CII, ASSOCHAM, FICCI, BCCI, PHDCCI, MCCI, IMC etc.
1.3) 'EXCISABLE GOODS' UNDER CENTRAL EXCISE ACT, 1944 -
The 'Goods' except producing a 'Child' in the Country is treated 'Excisable Goods' under Central Excise Act, 1944 are attract duties of excise, which also include Salt. Chapter 2 to Chapter 96.
1.3.1) The raw materials like Plastics, Rubber, Glass, Sugar, Iron & Steel, cloth, Non ferrous Metals, Paints & Varnishes, Zinc, Lead, Petroleum Products, Inorganic & Organic Chemicals, Plywood's, Gases, LPG, Paper & Paper Boards, other base metals, etc are being produced by Large Scale, Multinational and Government Undertakings. They all are 'Excisable Goods' and attract on average 16% Excise Duty, Sales Tax 4% and Octroi another 4%. The Small Scale Sector pays all these Indirect Taxes to the Central Government, to State Governments and to Local Self Governments, which becomes the part of their Purchase price and are not able to recover from the Government under CENVAT, Sales Tax set-off, Octroi Set off as being done by the Large Scale Units and is never passed on to 120 millions Consumers.
1.3.2) The SSI Units always buy the raw materials from the retail outlet who are not recognized as the 1st Stage and 2nd Stage dealers, who are not allowed to issue CENVATABLE Invoices. They are not able to Procure Goods from the direct producers of these Goods.
1.3.3) DUTY DRAW BACK ON EXPORTS OF EXCISABLE GOODS-
They do not get draw back, DEPB and refunds of Customs and Central Excise Duty paid on their Inputs, when they Export their goods directly and are not interested to keep Rs. 10000/- blocked with designated Banks at Air Port, JNPT and other Port and pay minimum Rs. 600/- per year as Service Charges to the Bank and than run from pillar to Post to get REFUND. The expenses of travelling & other miscellaneous are higher than the REFUNDS. So the amount paid and collected as Duties and taxes not leviable by the Government remains with the Exchequer. The Economist and the bureaucrat know it being Indian born People, but over look while proposing or formulating the policies to milch the holy Cow.
2). CENTRAL EXCISE DUTY EXEMPTION IS NOT A SUPPORT TO SSI-
The Central Excise Duty exemption was never a Support to SSI Sector, since the Introduction of Central Excise Act, 1944. Please note that Units manufacturing Matches, Cigarettes, Biris, Sugar, Pan-Masalas, Petroleum Products, Branded and Proprietary Medicines, producing various Excisable Goods under the Brand Name or Trade Name (Intelecual Property Rights) (IPR), availing CENVAT do not get exemption. Providing Exemption under Section 5A of Central Excise is Compulsion for the Government. The Government forced to devalue the rupee against dollar in the year 1991. Have they enhanced the Exemption under the notification 175/86-C.E. dated 1-3-1986, from Rupees Thirty Lakh to Rs. 50 Lakh or Rs. 100 Lakh & under Notification 140/83-C.E. and 75/87-C.E. from Rs. 15 Lakh to 30 Lakh or Rs. 50 Lakh or Rs. 100 Lakh? They did not do it. The Collection in the real sense went down under the Head of Central Excise, because availement of MODVAT (Now CENVAT). The Large Scale Units, who did not pass on the proforma Credit availed under Rule 57A, started Utilising this un-used money for other purposes. They did not misuse the Credit obtained. There are very few cases detected by the Enforcement agencies for misuse of this since the introduction of from March 1986 the MODVAT (PROFORMA CREDIT).
2.1). DENIAL OF DUTY PAID ON INPUTS TO SSI-
We the Small Scale Sector People never claimed the Exemption from the payment of duty or tax to the Government. We had proposed to the Government in the year 1986 that we are ready to pay a Fixed amount per years per Small Scale Units on the basis of their turn-over on 15th April every year along with the Annual Statement of 'Excisable Goods' manufactured and cleared for domestic Sale or and for Export, when the licensing limit was brought down from 80% to Rs. 5 Lakh under Notification issued Rule 174A. (Notification 174/86-C.E. dated 1-3-1986)
The Economists and Bureaucrats did not accept our offer and raised the Exemption from Rs. 7.5 Lakh to Rs. 30 Lakh. Why? We did not ask for it. Refer the minutes of the meeting held on 24th March, 1986.
2.2). The undersigned was invited by the Central Board of Excise & Customs in the month of February 1999 to discuss and formulate the new policy and he had suggested to than Union Finance Minister, Mr. Yashwant Sinha that each and every Small Scale Unit will pay Rupees One Thousand along with the filing of Yearly declaration by 15th April if the Exemption Limit for all the Excisable Goods Covered under Exemption Notification 140/83-C.E. 75/87-C.E. and 16/97-C.E. is enhanced to Rupees 100 Lakh due to devaluation of Indian rupees against US Dollar. It was not accepted for the best reason known to Government Machinery. The filing of yearly Statement was dispensed by the Government by issue of Notification.
2.3). Allow the Assessees to remove the Goods (final products) from the place of Job-Worker on payment of duty, who opt for Modvat. It was permitted with certain Conditions from March 1999.
2.4). We wanted that all the units doing the Job-Work under Notification 214/86-C.E. dated 25-3-1986 as amended be provided authentication on their Delivery Challans. It was refused by the department saying that as they do not pay duty, so why should we authenticate?.
2.5). DENIAL OF ISSUE OF EEC NUMBER -
The units who do not to pay duty under Exemption Notifications were not issued the Excise Exemption Code Number by the Central Excise Department, to be printed on their delivery documents for Safe Guard the movement. Saying that when they do not pay duty & are not allowed to be visited by Central Excise officials, why to issue the 'EEC Numbers'.
2.6). Thereafter the responsibilities were cast upon the Central Excise Commissioners to issue the directive to the field Staff after the receipt of the declaration from the declarant directly. The IRS officer holding the Post of Commissioner of Central Excise FELT it below their dignity to check the declaration filed and issue the Administrative order to the Field Staff in Writing to issue the Excise Exemption Code Number, because the Power to issue the Central Excise Registration was vested with the Range Superintendent of Central Excise, who are not a officer of IRS Cadre under Central Excise Law. Technically every Government Servant are at par for providing Service to Public. They are Public Servants. They failed to Carryout the duty & had put certain blames on the Trade, which could not be proved. Are they above the Law?
2.7). ALLEGATION WITHOUT ANY VALID PROOF-
The Government and reformer set up as the Chairman of the Task force have not been brought any example, when they States under para 3.6.2 (iii) that Exemption leads to misuse of CENVATE CREDIT by the duty paying (Large) Sector which procure the Exempted Goods from SSI Sector, but wrongly takes credit on the basis of DUTY PAYING DOCUMENTS generated elsewhere. Who Generate the Documents, SAILS, BPCL, IPCL RELIANCE INDUSTRIES, BAJAJ BIRLAS, TATA, MUNJAL, THAPUR, MODI, BANGUR, HPCL, TISCO, TELCO & BHEL etc?
2.8). The Duty Paying Documents are issued by the Units Registered under Central Excise. The 1st Stage Dealer and IInd Stage Dealer who issue the Duty Paying documents are have to get registered with the Central Excise department and they are allotted the registered Number which is 15 digit start with PAN.
2.9). DOCUMENTS WHICH CAN BE CHECKED WITHOUT VISITING THE UNITS-
The SSI Units who are producing the 'Excisable Goods' which are treated as Taxable Goods under the Central Sales Tax Act, 1956 and under State Sales Tax Act, issue the Bills and Cash Memo. They all pay the Bill of Electricity to the distributor and supplier of Electricity under the Indian Electricity (Supply) Act, 1948 can not receive the Electricity without payment.
2.10). The production is accountable on the basis Electricity Consumed and is being done by the enforcement agencies of Central Excise department. They seize the bills of electricity and PassBooks of Banks. If they have failed to do so, the Economists & bureaucrat of the Task force have no right to put blame on SSI Sector and the Large Scale Units, who have been doing the Yeoman Service to the Central Government and State Government without Collecting A Single Paisa as Service Charge for Collecting, Central Excise Duty from 120 millions Indian inhabitant and deposit the said amount called Central Excise Duty in the designated Banks, for which they spend their own hard earned money. They are forced to do it under Registration imposed forcefully under the Central Excise Act, 1944, which has been adopted by the Government under Article 372 & which was not repealed under Article 395. It is an open violation of Article 23(1) and 23(2) of the Constitution and Article 14 and Article 19(1) (g).
2.11). SERVICE WITHOUT PAYMENT OF COLLECTION CHARGES-
The Government pays 11.18 paise for every Hundred rupees to the designated Banks authorised to accept the payment from the "Central Excise, Collector" and transfer the said amount to Government treasury after 15 days from the date of collection. They use the said amount for 15 days without paying Interest. Why? Do they any Service Charge to the Real Tax Collector. Are they not citizens of India or they Below the Category of Banks.
3). The first time the Government specified the upper limit and lower limit in the Notification issued during the year 1985 under Notification 77/83-C.E. for T1-68 and 83/83-C.E. of other Tariff items, which was Continued under Notification 175/86-C.E., 1/93-C.E. and under at present Notification 8/2002-C.E. upto Rupees 300 Lakh. If the units exceeds the limit, they will not be entitled to avail Exemption. The Units who are not interested to remains below this exemption limit, they are doing more, but this Condition is not applicable for Goods Exported and Goods sold under Brand Name and Trade Name (IPR) of other person, also the turnover which attract nil rate duty. Is it Violation of any Law of the Land. Central 100 Lakhs Units are having Registration - For Excise.
3.1). These condition has been laid down by the Government. There are 100 Lakh Units having obtained the registration under Central Excise having 15 digit registration number starting with the PAN as per the circular issued by the Central Board of Excise during the year 2001 after the issue of Notification 35/2001-C.E. (N.T.), which was amended by 65/2001-C.E. (N.T.). It looks that Task Force is not aware about it. Is these 100 Lakh Units belongs to Large Scale and Medium Scale Units? if not, who they?
4). DEMAND OF SERVICE CHARGES AS FUNDAMENTAL RIGHT-
The SSI Sector is ready to pay further Central Excise Duty on the 'Goods' they produce, as the effect of the duty is Cast upon the Consumers and is not a Direct Tax payable by the Manufacturer. They should be provided CENVAT CREDIT. Why the Policy makers are trying to Deny the Legitimate right to avail the Duty Paid on the Inputs? Why do they want Double Taxation? Why do they want the Check on every nook and corners and then say they want to TRUST the 'Tax Collectors' calling these Unit by the name of 'Tax Payers'? When they are not the 'Tax Payer' by any means of imagination. Why these 'Tax Collectors' are being denied the Service Charges, as being paid to the Banks? Why are they being Treated 'BEGAR' 'SLAVES'? Why are they being forced to Work for Government FREE OF CHARGE? They are not provided even Air Free.
4.1). How Duty exemption for SSI Sector Cause a break in the CENVAT Credit Chain & how it would adversely impact the adoption of a Full Fledged VAT? The Task Force failed to explain.
4.2). How the exemption leads to loss of valuable data, which proves counter productive in respect of dissemination of information, Tax Planning etc have not been clarified by the Task Force headed by the Senior Most Economic Affair Advisor to the Ministry of Finance and Company Affairs, Dr. V. L. Kelkar and various Representative of Major Chambers, who are paid DA/TA admissible under the prevailing Law.
4.3). PROPOSALS BY AIR DREAMERS -
The Economic Advisor and the former Finance Minster Dr. Manmohan Singh framed the policy of earning Foreign Exchange by exporting Indian made Goods, and by attracting FDI and former member of Planning Commission Former Finance Secretary & Economic Affair Advisor to Finance Minister Mr. M .S. Ahluwalia failed to improve the Generation of Electricity by providing the place to Dhabol Power Corporation in Maharasthra. Both these Economists like Dr. V. L. Kelkar and the former Union Finance Minister Yeshwant Sinha have been opposing the expansion of Small Scale Industries in India under the direction of International Monetary Fund (IMF), who have provided the Colateral Security for the Investment to FII Under the guise of FDI to topple the Indian Industries & they want to convert this Country as a Trading House for Multinationals and who can not compete with SSI. They have taken the guarantee from Indian Government. The Indian Foreign Exchange is lying at US with IMF & World Bank, on which Government earns just 1 or 1.5% interest. The Indian Industry borrow the Forex at 6 to 8%. Is it called 'Economy'?
4.4). LIMIT WAS ENHANCED AS PER THE PROMISE -
The Limit was raise by the Prime Minister Atal Behari Vajpayee due to compulsion as promised in writing to raise the limit to Rupees One Crore, as they had tabled this move in the Parliament on 7th May 1997 being the leader of opposition, which was supported by the leading members of present NDA Government. A letter was written by Dr. Murli Manohar Joshi to the undersigned as Chairman of Commission Finance as the move failed and they fulfilled the promise.
BLACK WILL TAKE NO OTHER HUE & AIR DREAMING IS NON-PRACTICAL SOLUTION -
4.5). THE VAT SYSTEM -
There are 120 Countries World over have switched over to VAT (Value Added Tax) System as only one Source of Indirect Tax. They do not have the Central Excise, State Excise, Central Sales Tax, State Sales Tax, Turn-Over Tax, Profession Tax, Entry Tax, Luxury Tax, Entertainment Tax, Passenger Tax, Goods Tax, Stamp Duty, Registration Fee, Consignment Tax Cesses, Octroi etc etc. All these taxes and duties have been merged under One Tax Called VAT.
4.6). The Task force is talking about National VAT (CENVAT) and State Level VAT and Suggested to bring back some amendment like the Article 278, which was repealed by Constitution (Seventh Amendment) Act 1956. The Article 278 (Agreement with States in Part B of the First Schedule with regard to certain financial matter :-
Repealed by the Constitution (Seventh Amendment) Act, 1956, S.29 and Schedule.:-
"The Original Article Repealed w.e.f 1-11-1956 read as follows:-
"(1) Notwithstanding anything in this Constitution, the Government of India may, Subject to the provisions of Clause (2), enter into an agreement with the Government of a State Specified in Part B of the First Schedule with respect to-
(a) the levy and Collection of any Tax or Duty leviable by the Government of India in such State and for distribution of the proceeds thereof otherwise than in accordance with the provisions of this Chapter;
(b) the grant of any financial assistance by the Government of India to such state in consequence of the loss of any revenue which that State used to derive from any Tax or Duty leviable under this Constitution by the Government of India or from any other sources;
(c) the contribution by such State in respect of any payment made by the Government of India under clause
(1) of Article 291, and when an agreement is so entered into the provisions of this Chapter shall in relation to such State have effect subject to the terms of such agreement.
(2) An agreement entered into under Clause (1) shall continue inforce for a Period not exceeding TEN YEARS from the Commencement of this Constitution;
Provided that the President may at any time after the expiration of Five Years from such commencement terminate or modify any such agreement if after consideration of the report of the Finance Commission he thinks it necessary to do so.
"Explanation - For the purposes of Sub-Clause (a), a Sale or Purchase shall be deemed to have taken place in the State in which the "Goods" have actually been delivered as a direct result of such sale or purchase for the purpose of Consumption in that State, not withstanding the fact that under the General Law relating to sale of Goods the Property in the 'Goods" has by reason of such sale or purchase passed in another state original enacted Clauses (2) and (3) of Article 286 were as under:-
(2) Except in so far as Parliament may by law otherwise provide, no law of a State Shall impose or authorise the imposition of a tax on the Sale or Purchase of any 'Goods' where such sale or purchase takes place in the Course of Inter State Trade & Commerce.
Provided that the President may by order direct that any tax on the Sale or Purchase of 'Goods' which was being lawfully levied by the Government of any State immediately before the Commencement of this Constitution Shall notwithstanding that the imposition of such Tax is Contrary to the provisions of this clause, continue to be levied until the Thirty First of March 1951.
(3) No Law made by the Legislature of a State imposing or authorising the imposition of a tax on sale or purchase of any such 'Goods' as have been declared by Parliament by Law to be essential for the Life of the Community shall have effect unless it has been reserved for the Consideration of the President and has received his assent.
They have been replaced as under:-
(2) Parliament may by Law formulate Principles for determining when a Sale or Purchase of 'Goods' takes place in any of the ways mentioned in clause (1).
(3) Any Law of a State shall in so far as it imposes, or authorises the imposition of, a tax on the sale or purchase of 'Goods' declared by Parliament by Law to be of Special importance in INTER-STATE Trade or Commerce, be subject to such restrictions and Conditions in regard to the System of levy, rates and other incident of the Tax as Parliament may by Law Specify.
It also has been changed during the Finance Act, 2002, the Tax can be levied on Iron & Steel by the States. People are leaving the hope & Trust on the Government & the beaucracy.
4.7). POWER TO AMEND THE CONSTITUTION -
It is true that Parliament is empowered to Carryout any amendment in the Constitution and in the Union List-I, State List - II and Concurrent List-III under Seventh Schedule and can define the Word 'Tax payer' and 'Tax Collector' Separately Under Article 366. Are we going to have Two types of VAT in India as India is a Union of States and is not ONE Country as a whole, like Japan, United Kingdom, European Union, Pakistan, Bangladesh, Nepal, Bhutan and as per the provisions of the Constitution and agreement reached the Centre can not interfere in the jurisdiction of State Government. The Task Force has not been able to clarify, while recommending these VATS.
4.8). BEGGERS AND BORROWERS COULD NOT BE CHOOSERS -
Extension of SSI Sector Duty Exemption to Matches (Chapter 36) - There are 18000 units registered from SSI Sector producing the Matches and have been paying the Duty of Excise in the Similar way the 2 -3 Large Mechanized Units, who are not selling the Matches in India on equal M.R.P (Maximum Retail Price). They do not avail the CENVAT. They have never demanded the General Exemption. They all are running and earning reasonable profit. The 2-3 Large Mechanized Units are running under loss, as they are unable to compete these 18000 SSI Units providing employment to Large Number of People in Madurai and Chennai Districts of Tamilnadu. On one side the Task Force is recommonding to do away the Exemption to SSI, being creating problems for implementation of VAT, not able to have DATA, which proves Counter productive in respect of dissemination of information, tax planning and other side recommonding Exemption to Matches.
Is it not true that these 18000 Units do not do palm greasing of Tax Officials of Central Board of Excise, as they are not availing CENVAT on the INPUTS and Capital Goods for Producing the 'Matches' Classifiable Under Chapter 36 which is attracting duty of 32% with no SSI exemption under 8/2002-C.E. dated 1-3-2002. It looks that some Multinational Organisation's Interest to Market the Matches under their Brand Name / Trade Name (IPR) in India as all these Units are located in the rural areas of Tamilnadu and will be allowed to retain the General Exemption as per the definition given under the explaination in the Notification 8/2002-C.E. dated 1-3-2002, 9/2002-C.E. dated 1-3-2002 & 88/88-C.E. dated 1-3-1988 as amended issued for the units recognised by Khadi & Village Industries Commission and being run by the women cooperative Societies etc. etc. Today they all are registered and Collect the Central Excise Duty from the Indian Consumer as Rural Area.
4.9). POLITICAL DECISIONS -
Location Based Exemption - We do not want to give our views, as these exemptions are politically motivated and not provide any exemption to SSI.
5). THE IMPORTER OF INDIAN GOODS DO NOT FOLLOW OUR DICTAT -
Zero Rating Exports - Here again we do not to give our views as Central Excise is applicable to the Goods produced in India, as per Entry 84 of List - I (Union List) of the Seventh Schedule of the Constitution and Excise duty can not be imposed on Goods Exported out of India as the duty of Excise is recoverable from the Buyers and the Importers are not bound by the Tax Laws applicable in India. The Exporters are provided the CENVAT Credit on the Goods exported out of India and also the duty paid on Capital Goods used to manufacture the Goods exported out of India.
We have failed to under stand the recommondation that from 1st April, 2003 export should be Zero rated.
6). CUSTOMS PROCEDURES AND TRADE FACILITATION BASIC REFORMS -
We do not have our views on this reform as it is going to remain Paper tiger only. Reason the Power vest with the Customs officers to clear the Consignment for Import, we importers can not wait for speaking orders as they have to pay demmurges to the Port Authorities on Goods Imported. The Port Authorities are not bound by the Customs Act, 1962 and Customs Tariff Act, 1975. They are independent authorities. There is no provision under the Customs Act to audit the accounts of Importers, as the importers are allowed to import the Goods without the Import Licence except Arms and Ammunition, Defence Goods for National Security.
Most of the Imports are carried out through Customs House Agents, who are Licenced to work as CHA.
7). CENTRAL EXCISE PROCEDURAL SIMPLICATION -
The Word "Tax Payers" and Tax Collectors needs to be defined. The role of Central Excise Administration must be clarified. It is matter of great Surprise that Central Excise Rules No. 2 2001 have been replaced with Central Excise Rules 2002, which have replaced the Central Excise Rules, 1944 which were more than 234 in numbers and though the Central Excise Rules, 2002 are only 72, but they are not clear to Central Excise Administration. Certain rules are being misused by the authority which empowered the Chief Commissioner and Commissioner of Central Excise to issue directive to the field Staff.
Similarly the rules are being misused by Central Board of Excise & Customs to issue the Notification as Non-Tariff Notification. Recent on is amending Notification for REGISTRATION, where the Application form has been prescribed consist of SEVEN PAGES, which has to be filled by the Registrant by INK and can not be typed on typewriter or on the Computer Printers. They are asking certain information, which are not easily available with the registrant such as layout and details available with the Land Revenue authority known as PATWARI (TALATI) Land Revenue officer at Village Level. It is a new way of Harassment.
8). By increasing the Central Excise Chief Commissioners from 10 to 23 and Commissioner from 61 to 92, Commissioner of Central Excise (Appeal) from 18 to 79 have not brought any relief to the Tax Collectors. In fact Harassment has increased.
9). ASSESSMENT ON MRP-
The introduction of Central Excise based on the Maximum Retail Price (MRP) has not brought any relief to the Consumers. The Consumers are now paying more price for the same Goods, which is more than M.R.P. The Goods imported for Sale in India, do not follow the procedure. The Customs authorities assessing the Customs Duty, CVD, (Countervailing Duty in lieu of Central Excise) Special Addition Duty in lieu of Sales Tax (SAD) is not leviable as per the Notification issued by the DGFT. They are not bound by the directive of any other ministry except the Department of Revenue, Ministry of Finance.
10). ARTIFICAL DEFINATIONS INSERTED AS STATUTORY NOTES UNDER SECTION 2(f) of C.E. Act, 1944 :- (MANUFACTURE) MANUFACTURE -
The definition of manufacture under Section 2 (f) of Central Excise Act, 1944 has been modified in the year 1985 and it includes any process incidentally or the process, which is inserted as section notes and Chapter Notes amounts to 'Manufacture' and shall be construed accordingly. If over rides Statutory Legal and dictionary meanings -
Today, Brand Name / Trade Name, Converting Bulk Goods to retail Goods, Printing the names on bottles, Capsules, Container drawing and redrawing of Pipes and Tubes of Chapter 73 & 74, Packing and re-packing, Galvanizing of Goods of Chapter 73, Labelling - re-labelling and any thing which is being specified by the executive will be treated as amounting to manufacture with retrospective effect.
The Indian Manufacturers if produce the Goods (Excisable Goods) with the Brand Name / Trade Name (Intelecual Property Right) of other person, will have to Collect Central Excise based on the MRP of the Multinationals. The Multinational will not procure these Goods and will import these Goods, as the Chapter Notes and Section Notes of CETA are not applicable on Imported Goods, which are Covered only under Customs Tariff Act, 1975 and Customs Act, 1962.
11). REVIEW OF GRANT OF CENVAT CREDIT ON DEEMED BASIS-
Deemed CENVAT Credit must be granted to all the Inputs being used by the Manufacturers / producers and Processors of Excisable Goods and they should be allowed to Collect the Central Excise on Value addition & should not break the CENVAT Chain. If it is not done it is going to be move against Transparency.
12). PERIODICITY OF PAYMENT-
We agree with the recommondation provided under Chapter Para 6.1.2 & also approve the recommondation under Para 6.2.2. for mode of payment.
13). REMOVAL OF GOODS ON JOB-WORK-
Provision as applicable under 83/94-C.E. & 84/94-C.E. be extended to Goods Covered under Textile Chapter 51 to 60 of CETA,, if as applicable to units availing exemption under 8/2002-C.E. & 9/2000-C.E. both dated 1-3-2002.
14). Para 12 of Chapter 4 -
Voluntary filing of documents by the Tax Collectors.
The Units producing Goods called excisable and if they granted exemption from Registration under the Central Excise Rule 9 of Central Excise Rules 2002 they should be permitted to file the Annual Declaration through their respective Associations, who will file the documents and will get the dated acknowledgement in Writing. It will Safe Guard the Interest of all these "Tax Collector".
15). SERVICE CHARGES / COMMISSION -
The Government can not force upon any Citizen to work for them without PAYMENT. Such move is an offence, prescribed under Article 23 (1) of the Constitution. The Service Charges / Commission must be settled for all these Tax Collector, who are providing the Service to Central Government and State Governments under the 'Laws in Force'. It is a binding as per the Constitution. It is not a Fundamental Duty prescribed under Article 51A for the Citizen.
16). CENTRAL EXCISE DUTIES ON FOOD PRODUCTS-
Raising from Orate 8% and reducing the duty on beverages like Coca Cola, Pepsi Cola, and packed water from 16% to 8% is being opposed. We propose the Duty on Pepsi & Coca Cola should be raised to 32% at the level as in the year 1999-2002 & withdraw the Duty imposed during 2001-2002 on certain products, which has been raised from Nil to 4% to 8%.
We also oppose the duty being imposed from Nil to 4% without CENVAT.
We are not paying Duty from Our pocket, we are the Tax Collector, we demand Full CENVAT, NO CENVAT , NO DUTY CENVAT Credit is our Fundamental and Legal Right to Claim. It should not be denied, which even the Parliament can not deny us without amending the CONSTITUTION.
17). SERVICE TAX-
First of all impose the Service Tax under Finance Act, 1994 on Services being provided to the People of Jammu & Kashmir, as it is not applicable in that State . It is a violation of Equality before law. The Central Excise Act, 1944 is applicable in the State of Jammu & Kashmir, why they have been Left Free. This Tax must be Scrapped for all the Indians living in India also like People of Jammu & Kashmir Equality before Law under Article 14 of the Constitution. It is a Fundamental Right Conferred on all.
18). VALUE ADDED TAX-
Repeal all the Taxes being Collected Indirectly from the Indian Habitat under various Acts, including Central Excise Act, 1944, Central Sales Tax Act 1956, State Sales Tax Act, Turn-Over Tax, Profession Tax, Cesses, Luxury Tax, Entertainment Tax, Purchase Tax, on Sugarcanes, Entry Tax, Octroi, Goods & Passenger Tax, State Excise Duty, etc etc. and impose Value Added Tax. Single Indirect Tax - No other Taxes and Duties.
The World over there is only One Tax Called VAT, and there is no CENVAT (National Vat), & State Vat even in the Eurpean Union, which is the Union of Various Countries in Europe. As long as there is no Uniformity move in this direction Imposing this will lead to Chaos.
We are enclosing the List of 63 Inspectors, who such the Blood of Tax Collectors. The maximum Inspectors are from Central Excise & Income Tax departments. Both are under the Control of Finance Ministry empowered to present Budget under Finance Act, 1931 framed by the Britishers to extract money from Indian Merchants.
We are sure that our view will be considered while enacting the reforms suggested by the Two Task Force headed by leading economist Dr. V. L. Kelkar and its members.
Thanking you
Yours truly,
For Bombay Small Scale Industries Association
RAKSHPAL ABROL
PRESIDENT
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