Call for transparency in Central Excise Dept.

By Our Special Correspondent

CHENNAI, AUG. 12. The former Union Finance Minister, Mr. P. Chidambaram, called for an early end to treatment of the Customs department as a source of revenue.

As long as India remained a net importer of capital goods, intermediate products and raw materials, high rates of import duty would affect the competitiveness of Indian industry, inasmuch as the duty, in economic terms, was a ``tax on exports'', Mr. Chidambaram said.

Speaking at a seminar on ``What ails the revenue administration in India'', organised by the Madras Chamber of Commerce and Industry (MCCI), Mr. Chidambaram said continuing with high rates of customs duty (up to 40 per cent, compared to an average of 5 to 10 per cent in developed countries) after the abolition of quantitative restrictions on imports and multiplicity of duty rates were an ``invitation to the Customs staff to take bribe and a temptation to importers to pay bribe''.

The trend the world-over was for the Customs department to play the role mainly of vigilance over supply of items like drugs and guns, he said.

The Customs department should also facilitate larger imports and exports of tradable goods. However, the high level of export incentives in India encouraged fraud in the name of exports.

Calling for a differentiated approach to dealing with problems of the three revenue departments, namely, customs, excise and income-tax, the former Finance Minister said the first task of the Central Excise department should be to enforce transparency.

It was a poor reflection on the integrity of the manufacturing sector that out of a total of 1.2 lakh excise assessees, just a handful were prepared to accept clearance of goods and assessment of duty online.

The scheme of online assessment was meant to avoid visits of excise staff to the premises of manufacturers and introduce transparency, but the assessee community was not interested in transparency, he said.

The tax authorities, on their part, should avoid the tendency to go on appeal in each and every case for fear of vigilance or parliamentary inquiry, even where the merits of the case clearly went against revenue, Mr. Chidambaram said.

Referring to income-tax, he said the narrow base of tax payers showed widespread evasion and this led to the burden of higher rates falling on honest assessees.

Though it was wrong on the part of the Income-tax Department to have brought back the system of scrutiny of returns, the fact remained that large sections of the affluent population paid no income-tax at all or paid only nominal tax.

Mr. M. R. Sivaraman, former Revenue Secretary to the Union government, said exemption from excise duty for the small-scale sector up to a turnover of Rs. 1 crore (which encouraged splitting up of installed capacity), widespread misuse of Modvat credit, failure of exporters to fulfil their export obligation arising from duty-free import of inputs and leaving 50 per cent of services untaxed were responsible for the lack of expected buoyancy in revenue in the wake of reduction of rates and slabs.

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