Loopholes in excise notifications
AKSHAYA KUMAR SAHOO
, Oct. 21
As the nation battles an ailing economy and tries to steady the ship by “harsh” measures, a section of industrialists engaged in manufacturing of plastic goods made of plastic scrap and wastes in special economic zone continue to enjoy double tax benefits.
Thanks to jugglery of words in the Union government’s Excise Exemption Notification (EEN) that deprives the national exchequer crores of rupees tax revenue and lack of efforts to arrest the loopholes.
The loss pertains to the exemption of whole of the excise duty (CVD) to the plastic goods manufacturers in special economic zones (SEZ).
As per the March 1, 2006 notification No 4/2006-Central Excise, the exemption was not allowed for the units located in free trade zone (FTZ), SEZ and 100 per cent Export Oriented Units.
However, the exemption was allowed by on March 1, 2011 Central Excise Exemption Notification No. 4/2011. The Serial Number (SL) XVII of this notification prescribes that “a free trade zone and a special economic zone” shall be omitted against SL No. 78 of the March 1, 2006 notification and allowed the exemption to the units in SEZ.
Prior to the 2006 notification, the custom authorities had fought a legal battle on this exemption issue, spending huge money from the national exchequer. That is why in the 2006 Notification No. 4/2006, the Union finance ministry notification clearly mentioned that, “For the removal of doubt, it is hereby clarified that nothing contained in this exemption shall apply to plastic materials reprocessed in a FTZ, a SEZ or a hundred per cent export oriented unit.”
These exemption notifications, according to industry sources, have created a lot of confusion among the businessmen and helped a privileged few.
At least 25 such units in Kandla SEZ and Falta SEZ have benefited from the excise exemption notification, alleged section business men who run plastic reprocessing units outside the special economic zone.
“It’s quite surprising that a responsible body like Central Board of Excise and Customs continues to allow dubious tax exemption when it has fought long legal battles for the same cause,” the experts said. They maintained that the exemption clause in the Notification No. 4/2011, with its subsequent effect on Exemption Notification No. 12/2012, should be withdrawn. Besides, recovery process should be initiated to protect the ailing national economy in the interest of the nation.