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Kelkar Report: Green channel for all

By Our Special Correspondent

NEW DELHI NOV. 8. The Member Secretary, Taskforce on Indirect Taxes, S. M. Bhatnagar, today clarified that the Kelkar Committee was against exemptions but where these were unavoidable, it was proposed to move towards a system of budgetary support to make the entire administration of indirect taxes transparent. Inaugurating the workshop on implications of Kelkar Committee Report on indirect taxes organised by the Associated Chambers of Commerce and Industry of India (Assocham), Mr. Bhatnagar said the recommendations were path-breaking as the committee had practically placed the budget proposals before trade and industry.

He said to rationalise the existing procedures for customs clearance, the committee had proposed a green channel for all. "We will apply the yardstick of risk assessment across-the-board and do away with the privilege class of exporters who now enjoy the green channel facility.''

Responding to the concerns expressed by Nihal Kothari, Chairman, Assocham Indirect Tax Committee, Mr. Bhatnagar said in Central excise and customs the Kelkar Committee had recommended two duty rates — 8 and 16 per cent — and drawn up a road map for duty rates up to 2005. This rationalisation, he said, would go a long way in bringing about certainty and enable industry to take long-term business decisions.

He said to impart a clear-cut focus to exports, the committee had recommended reduction in domestic tariff area (DTA) access to 10 per cent by the year 2005 from the current level of 50 per cent. For export promotion, the committee had suggested the drawback duty route and faster dispersal of drawback.

In order to make this work, it was proposed to offer interest to the exporters if the drawback was not credited in their account within seven days, he said.

Sukumar Mukhopadhyaya, former Member, CBEC, pointed out that the taskforce had deviated from the avowed principles of minimising the number of rates as the number of rates continue to be as high as ten for 2003-04 and 9 for 2004-05.

He said the plethora of options of duty rates in different chapters would lend itself to complications and suggested one rate per chapter. The single point that has been missed is that controversies arise only because of alternative rates of duty, he said and cited the example of the chapters on machinery which has all the options.

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