TNC Rajagopalan: It is time for professionalism at the top

EXIM MATTERS

Why does the trade distrust or even detest the bureaucracy? A ready answer would be corruption at ground level. But bungling at the top level is another "" as a spate of clarifications and notifications in recent days have shown.

The regulations relating to Special Economic Zones (SEZ) as well as the relative provisions of the Customs Act, 1962 came into effect on May 11, 2004.

Nine months later, the Central Board of Excise and Customs (CBEC) has now issued circular no. 6/2005 dated February 3, 2005 clarifying that the duty drawback should be paid against supplies from domestic tariff area to SEZ units.

This clarification was necessary, as some SEZ Customs authorities, in accordance with its earlier circulars, were not paying the duty drawback, says the CBEC.

The education cess was introduced in the Budget 2004 on July 8, 2004. The CBEC has now issued circular no. 5/2005 dated January 31, 2005 clarifying levy and collection of education cess under various export promotion schemes.

During these seven months, the importers had to live with different interpretations by different Customs authorities.

The Foreign Trade Policy was announced on August 31, 2004 granting exemption from Terminal Excise Duty (TED) to deemed exports on supplies made against International Competitive Bidding (ICB).

The finance ministry followed it up with a notification on September 10, 2004 inserting entry no. 301 in the Central Excise exemption notification no. 6/2002 dated March 1, 2002.

The CBEC, however, conveniently forgot to amend the Cenvat Rules suitably and the concerned manufacturers were required to pay 10 per cent of the price for supplies against ICB.

Now almost five months later, Cenvat Rule 6(6) has been amended through notification no. 3/2005 dated January 28, 2005. While unveiling the new Foreign Trade Policy, the commerce minister proudly announced several fast-track clearance procedures for Export Oriented Units (EOU), obviously without due consultation with the CBEC.

After five months, the CBEC has now come out with a draft circular grudgingly accepting only a few of the announcements. The director-general of Foreign Trade (DGFT) has now issued public notice no. 50/2004-09 dated January 24, 2005 amending the provisions for fast-track clearance.

The Customs notification no. 32/97 dated April 1, 1997 deals with duty-free imports for jobbing. The notification still maintains that the provisions are applicable only for imports made in accordance with the earlier export and import policy.

The notification has still not been amended to make it applicable for imports under the current Foreign Trade Policy.

The Customs notification no. 158/95 dated November 14, 1995, dealing with re-import of exported goods for the purpose of repairs and re-export still refers to Rule 173 MM of Central Excise Rules 1944.

These rules were replaced by new rules in 2001. In past few years, every Budget brings retrospective amendments to the law denying the benefit of court judgments to the trade that had conducted itself in accordance with the law applicable at the relevant time.

The government has armed itself with powers to issue clarifications that will have retrospective effect to the detriment of the trade.

A corrupt officer hurts those who come in contact with him, whereas a bungling CBEC or DGFT hurts millions in the trade all over the country. It is time for greater professionalism at the top.

tncr@sify.com