SME wishlist: Simplify tariff and procedures

EXIM MATTERS

The Union Budget, 2007, is barely seven weeks away. What are the simple expectations of small entrepreneurs from the finance minister on the excise and customs front?

The first prayer is to keep the excise and customs tariff simple. Today, it requires a specialist to calculate the duty payable on imports. At least four different types of duties - the basic customs duty, the additional duties of customs under Section 3 (1) and Section 3 (5) of the Customs Tariff Act, 1975, and education cess - have to be reckoned for arriving at the duty payable. The duty calculations run into four decimals with requirements of additions and multiplications at various stages that are not easily understood by the uninitiated.

Is it not possible to stipulate a single duty rate that will cover most items and have only a list of items that will attract duty rates other than the standard rate? Is it not possible to have duty rates that do not involve decimals? Can the government collect a single import duty, allocate whatever it wants for education or healthcare and allow a part to be taken as Cenvat credit?

The second prayer is to do away with the exemption raj. Too many exemption notifications have to be referred to before arriving at the duty rates. Too many conditions have to be complied with for taking advantage of the exemptions. For example, the exemption for home clearances up to Rs 1 crore has so many conditions that the entrepreneurs are apprehensive that on one pretext or the other the authorities will allege violation and demand bribes.

Too much quality entrepreneurial time is wasted in compliance and coping with the demands of the authorities.

The third prayer is to simplify the excise rules. Yashwant Sinha had simplified the excise laws to quite an extent in 2001. In the past five-and-a-half years, too many complexities have crept into the excise law. For example, the Central Excise Rules, 2002, have many more provisions than earlier. It is time to take a re-look at the legal provisions and re-write many provisions with a view to make life easier for entrepreneurs.

The fourth prayer is to re-draft many old notifications and bring them up to date. The customs exemption notifications dealing with re-imports still prescribe conditions such as compliance with Rule 173 MM of Central Excise Rules, 1944 and de-logging the entry in the DEEC books although Central Excise Rules, 1944, were replaced with a new set of rules in 2001 and DEEC book was abolished in the year 2002 for advance licences.

The fifth prayer is to update the manual of supplementary instructions every year incorporating and consolidating all the circular instructions. The Reserve Bank of India is able to come out with a master circular every year on most topics. The commerce ministry is able to come out with updated version of the Foreign Trade Policy and Procedures every year. Why can't the Central Board of Excise and Customs do that?

The above wish-list is not asking for too much. If the finance minister wants he can easily simplify the laws and rationalise the duty rate structure. What it requires is a willingness to listen to the small entrepreneurs, who contribute in no small measure to employment generation.

email : tncr@sify.com