LATEST HAPPENINGS
AIFSC/AM/13/2007
28.09.2007
To
Shri S. K. Singhal,
Chairman,
Central Board of Excise and Customs,
North Block, New Delhi – 110 002.
Sub: Control over 100% EOUs - reg.
Respected Sir,
It is a well settled matter that the control of the 100% EOUs within the jurisdictional limits of Commissioners of Customs of a Port city is vested on the Commissioner of Customs and this arrangement, which found the satisfaction of the trade, worked smoothly.
The issue of control of 100% EOUs has again been brought to fore to consider the handing over of all the EOUs including the ones within the Port city to Central Excise in the context of cases of duty evasion detected in this Sector. Your kind attention is drawn to the office memorandum F.No. 296/59/2007 – CX.9 dated 24.08.2007 issued by the Commissioner (CX), CBEC addressed to the Chief Commissioners of Customs, Mumbai I/Mumbai II/Mumbai III and the Chief Commissioners of Customs, Chennai/Chennai (Preventive) in this regard.
Your kind attention is further drawn to the draft performance audit report 2005-06 and the audit report no.07of 2007 (Indirect taxes) wherein the irregularities reported in those 100% EOUs, which were mostly under the control of Central Excise. Moreover, the irregularities leading to loss of revenue were committed by mainly by those 100%EOUs which are manufacturing units and have physical exports. Thus, it can be mentioned that the STPI units who process software for online export under the supervision of STPI, generally have performed to satisfy the need of law.
It has been found that the said reference was sent only to the Chief Commissioners of Customs, Mumbai I/Mumbai II/Mumbai III and the Chief Commissioners of Customs, Chennai/Chennai (Preventive). It appears that the issue concerns largely of the EOUs under Mumbai and Chennai Custom Houses. It is submitted that out of total of 585 100% EOUs controlled by Mumbai Custom House, only 29 are manufacturing units and remaining 556 are STPI units, none of whom were reported for any irregularities. It may be reiterated that the STPI units do not require any physical supervision of Customs or Central Excise over their software processing. The physical control over their capital goods needs to be exercised, which can be best done by the Customs Officers, who clear those on importation.
Therefore, the duty evasion cases detected in 100% EOUs, which were under the control of Central Excise, cannot be taken as a reason to bring all the EOUs under the control of Central Excise removing the efficient Customs Officers. A close study of the said Audit Reports will indicate that the irregularities detected were due to individual negligence and not due to the failure of the existing laid down norms. It is believed that strict compliance of the laid down rules and procedures could have hindered such duty evasion.
Further, the issue of dual control of EOUs as has been projected that “Customs have jurisdiction over the EOUs in port cities while other Units are under Central Excise at the remaining places is not good.” It is submitted that while clearing the imported capital goods or consumables at the port cities the functions of the Customs Officers cannot be replaced with the officers of Central Excise since the clearances are to be done through the Custom Houses. The EOUs in the port cities are under the control of the Custom Houses and the EOUs outside the jurisdiction of the Custom Houses are under the control of Central Excise. In fact, there is no dual control over the functioning of any EOU by both Customs and Central Excise.
In view of the above, it is requested that the control over all the 100% EOUs within the port cities must be retained with the respective Custom Houses and the STPI Units (EOUs) falling in the adjoining Municipal limits may also be handed over to Customs for an efficient and better working.
Thanking you,
Yours Faithfully,
(ANUPAM MAJUMDAR)
PRESIDENT