Following the operationalisation of Large Tax Payers Unit (LTUs) from 1 October, the department of revenue issued a revised format of ER-1 and ER-3 returns for all central excise assesses on 12 October 2006. The new ER1 and ER3 return form is applicable for all assesses including large taxpayers. In the new format, the department has included new tables to get information on inter unit movements of intermediate goods of large taxpayers who have opted for LTU. Similarly, the details of excess CENVAT Credit transfer to deficient transfer are also sought in the new forms.

A large taxpayer has the option to transfer any excess CENVAT credit (of central excise duty or service tax) accumulated in one manufacturing unit or service providing unit to any other unit under cover of a transfer voucher under rule 12A(4) of the CENVAT Credit Rules, 2004. Self-adjustment of excess duty paid through CENVAT credit account must be reported to the excise office. Other details such as credit taken on imported inputs, and credit taken on imported capital goods, are also being sought from all central excise assesses.

The new format of ER-1 return is applicable from October 2006 and the ER-3 return will be applicable for the return to be filed for the quarter October-December, 2006 to be filed in January 2006.

Similar changes have also made in the ER-3 return which are applicable to all SSI units filing quarterly returns. The department of revenue also clarified that necessary changes are being made in the SERMON software for entering the revised ER-1/ER-3 returns.

The creation of caste hierarchies of large tax payers with green channel CENVAT transfer and intermediate goods movements is a source of great heart burn to small and medium size units which source inputs from hundreds of vendors spread across the country. Their logistics and CENVAT transfers are in a mess for lack of empathy from the revenue authorities.

Metallic waste – double punishment: The Director General of Foreign Trade amended the metallic waste and scrap policy once again on 23 October, 2006. All import consignments must accompany a pre-shipment inspection certificate stating that the consignments does not contain any types of arms and ammunition or any forms of explosive materials. The agency must certify that the imported items are actually a metallic waste, seconds and defectives as per the internationally accepted parameters.

Import transactions, name of importer as well as exporter must be indicated in all documents.

The new format of the certificate will be notified in a due course. The new certificate and procedure for authorization will be operational with effect from 1 April 2007.

The much postponed compulsory suppliers registration system will also apply from 1 April 2007. Earlier this was supposed to substitute the pre-shipment certificate system. Now both the certification system as well as the supplier registration system will operate from 1 April 2007. Two barriers for the same transaction will push up cost to the importer and user, ultimately the consumer must bear the burden of the procedural cost.

On top of all this, the Government is going to put imports through a whole body scanner type procure to check for foreign objects in import consignments. The Union Cabinet on 27 October gave its approval for procurement through a Global Tender of 4 fixed X-ray and 3 mobile Gamma ray container scanners at a cost of Rs. 172.94 crore for installation at Mumbai, Chennai, Tuticorin and Kandla Ports.

India depends upon human intelligence to detect law violation. The introduction of expensive gadgets and self defeating certification and registration procedure is of a little help.

Chacko retires: Mr. K.T. Chacko, DGFT retired from service on 31 October. In his long stint with DGFT, he was known for his open approach to trade. We understand that Bhawani Singh Meena from Maharashtra Cadre of the Administrative Service is coming as the new DGFT. He has put in many years in North Block and Shastri Bhawan and know the job well. Mr. Chacko is likely to move to IIFT as the new DG where Mr. Probir Sengupta’s term is coming to an end.