CBEC sets out on revenue-collection drive

Written by Gireesh Chandra Prasad | Gireesh Chandra Prasad | New Delhi | Updated: Jul 14 2014, 07:45am hrs
The revenue department will take a slew of measures in the coming months to meet the ambitious growth target of 20% set for indirect taxes this year, which would include steps to realise nearly R1 lakh crore of arrears from excise, customs and service tax, Central Board of Excise and Customs (CBEC) chairperson JM Shanti Sundharam told FE.

Revenue mobilisation measures would be taken on a war footing as the growth target for this fiscal is twice the annual growth rate recorded in 2013-14. In the first two months of the fiscal, indirect tax collection grew just over 4%.

CBEC will intensify its crack down on misuse of Cenvat credit utilisation and employ information technology to identify for audits the manufacturing units suspected of tax evasion.

We will try our best to achieve the target. Realising tax arrears, pursuing cases that are in courts, improving our audit performance and taking anti-evasion measures are some of the ways to achieve this, said Sundharam. The tax authority is presently examining a report on Cenvat invoice verification cross checking the way companies claim credit for the taxes paid on the raw material on the finished products tax liability.

While attempting to check tax evasion and mobilise revenue, the apex policy making body for indirect taxes will also concede to industry demands for fine tuning the recently amended Central Excise Valuation Rules meant to ease the rigors of a Supreme Court order on valuation of goods for levy of excise duty.

Last week, the government amended the Central Excise Valuation Rules to give relief to companies selling products at a discount from extra excise duty demand. The amendment was introduced after businesses said an earlier circular issued in January on how to apply the apex court ruling did not give adequate relief. Experts pointed out that although the July 11 amendment to the Excise Valuation Rules show the good intention to bring relief, it was badly worded and need to be changed.

Shanti Sundharam said, We have asked the industry to come back to us and explain where exactly the rules need improvement in language. If there is further scope for making the Valuation Rules crystal clear, we shall do that, although the amendments to the rules already brought out were also vetted by the law ministry.

Sundharam said while the amended valuation rules would be applicable from July 11, showcause notices already issued will be adjudicated in the light of the January 15 circular and the context in which they have been issued.

Showcause notices were issued to several multinational carmakers after the Supreme Court had in August 2012 ruled that Fiat Indias discounted sale price could be rejected as a basis for excise valuation and that duty could be levied on production cost plus profits which is higher. The logic was that discounts given to consumers for market penetration was also a 'consideration' that producers received from consumers.

Last week amendments make it clear that this additional consideration, market penetration or whatever it might be called, should not by itself be a reason for rejecting the transaction price for excise duty valuation.

We are making it clear that in such situations (of discount sales) the said additional consideration is not to be treated as something that needs to be added to the cost price. The price on which duty will be levied will be the transaction cost, explained Sundharam.