Since the introduction of the Fringe Benefit Tax, opinion had taken roots amongst businesses that the finance minister is not hesitant to cause enough unproductive administrative work and harassment in the interest of meagre revenue. The opinion had gathered support with his proposals to complicate the Income Tax returns calling for details of expenses.
Now, the importers and excise assessees also have started apprehending that the government is taking more powers in its hands with a view to use strong arm tactics whenever necessary to bring pressure on the assessees. The latest provocation is the Taxation Laws (Amendment) Act, 2006 that has come into force with effect from July 14, 2006.
Section 104 of the Customs Act, 1962 provided for arrest in cases of evasion and acquisition of confiscable goods. Now, even false declarations/statements, actions preparatory to evasion and obstruction of officers involved in implementation of the law can invite arrest. Such offences can now attract imprisonment up to 2 years instead of earlier six months, under Sections 132 and 136. Summons can be now issued not only in connection with smuggling but also for any enquiry under the Customs Act.
A new Section 114AA of the Customs Act, 1962 now provides for penalty up to 5 times the value of goods in case of intentional signing of false declarations and statements. The government can now provisionally attach property during pendency of adjudication. A mere show cause notice is enough to trigger moves to attach property (Section 28BA) and even cause publication of names of alleged offenders (Section 154 B). The idea seems to be to pressurise the importers/exporters to cough up the demanded amount under duress.
Similar provisions in the Central Excise Act, 1944 empower the government to attach properties of alleged offenders (Section 11DDA) and publish their names upon issue of show cause notice (Section 37E).
Some sensible changes are also made in the Central Excise Laws. There is already a provision [Section 1A (2B)] to pay duty with interest before issue of show cause notice. There is also a provision (Section 11AC) to pay the whole of duty and interest plus 25 per cent of the duty determined within 30 days of the communication of adjudication order. Now, a newly inserted sub-section 1(A) to Section 11A of the Central Excise Act, 1944 allows the assessee to pay the whole of duty and interest plus 25 per cent of the penalty proposed in the show cause notice, i.e. before adjudication, within 30 days of receipt of the notice and cause termination of further proceedings.
Rule 16 of the Central Excise Rules, 2002 has been amended retrospectively to allow Cenvat credit of the duty paid on inputs by wire drawing units during May 29, 2003 to August 9, 2004 and also credit of the amount paid by such units to buyers of drawn wire.
A new sub-section (5) to Section 17 of the Customs Act, 1962 now mandates passing speaking orders on assessments made contrary to the claims of importer or exporter. New sub-section (4) to Section 18 provide for payment of interest when refund is not given within three months from the date of final assessment.
A new Section 110A of the Customs Act provides for release of seized goods and documents against bond when adjudication is pending. Prior sanction of senior officers is also now required in some situations.
T N C Rajagopalan