As per the mandate of the Parliament, the DGFT is the facilitator & therefore the name change to Director General of Foreign Trade took place as early as 1993 but it appears that till date what is facilitation is not understood in the right perspective. To my mind name change has made no difference because the mindset shows no sign of facilitation. The mindset does not change because corrupt practices wield power & nobody wants to give up that abuse & manipulation. The ground reality is therefore pathetic in terms of facilitation & qualify to be shameful & disgusting.
This is the story of Vadodara, RA. The online submission for the closure of Advance Authorization issued on 29.08.2022 is made. More precisely, the request is for Bond waiver as exports stand completed. However, the RA, Vadodara raises frivolous discrepancies & the matter is taken up with the policymakers that withholding of the Bond Waiver due to the frivolous nature of the discrepancies & consequent harassment is untenable but to no avail.
Now, we talk about the discrepancies in a threadbare manner. The first discrepancy raised is that Cenvat declaration is not submitted. In replies, the following is brought to the notice of the officials.
The Cenvat regime is replaced by GST w.e.f. 1.7.2017. The AA is dtd. 29.08.2022 therefore as on that date, the Cenvat regime was no longer applicable therefore the demand for Cenvat declaration is legally not valid. However, the RA, Vadodara officials continued to repeat that it is required as specified by the DGFT despite the fact that Cenvat credit is no longer in operation. Not only this, the official went ahead with the claim of a badge of honour saying that all exporters give the Cenvat declaration & the CA/Central Excise authority certifies that declaration & since it is continuing even after 5 years from the lapse of the Cenvat regime, this requirement is beyond challenge & cannot be dispensed with & no bond waiver can be granted. Therefore, it is crystal clear that even under the GST regime, merrily an invalid Cenvat declaration is being accepted by the DGFT offices & even after pointing out the discrepancies, no one seems to be bothered. The arrogance has no limits in the sense that you can complain to the policymakers but then they will prefer to keep mum & show no courage whatsoever to rectify the wrong. To my mind, this is a serious issue because how a wrong declaration can be taken per force by the DGFT offices & the professionals/Central Excise authorities are in a position to issue such a certificate to the exporters. I was refused a Central Excise certificate in reference to production & consumption just because the issuing authority is specified as Central Excise instead of the Central Excise & CGST therefore I am very sure that no C. Ex. authority has issued any certificate to the AA holders.
Further please note that a future event can never be certified by any authority or any professional & this does not require any proof because there is no control over the future with anyone. The imported material can be lost through many ways like floods, fire, theft etc. or cannot be put to use due to lockout etc. Therefore, in any case no futuristic certification can be demanded or valid. The Foreign Trade Policy paragraph 4.16 (ii) is therefore not tenable. We told Vadodara RA official that our Chartered Accountant is a sane person & he says that he cannot issue any certificate in respect of a futuristic event then to my utter surprise, the RA, Vadodara official instead of accepting the truth goes on to say that I know the Chartered Accountants who will issue the certificate & we will accept the same & we will introduce such CAs to you as if this is the role assigned by the DGFT to RA, Vadodara. This in effect means that there is no escape from the idiocy but to comply because the RA, Vadodara officials are completely managing the show to complete the format filling & filing it in their records to complete compliance.
Further, the point of law is that how a third party like Central Excise or a Chartered Accountant can issue a certificate on behalf of the licencee. It can be only be on the basis of a verbal/written assurance given by the licencee therefore Central Excise or a Chartered Accountant should believe the exporter & issue a certificate but the DGFT does not believe the exporter when the exporter is submitting a signed declaration. How this outsourcing leading to avoidance of any responsibility on the part of the DGFT of any nature is acceptable? The licencee has correctly specified in the declaration that inputs imported under the AA will be used in the manufacture of IGST payable goods (Cenvat regime is no longer operational w.e.f. 01.07.2017). There is no application of mind & merrily the DGFT continues with the Cenvat declaration, the exporter is forced to give that & the professionals issue a certificate in respect of an event beyond their control & nobody bothers about it thus closures of AAs issued under GST regime is happening all along on the basis of wrong declarations since the advent of the GST regime. There was a notification issued regarding the exemptions & corresponding change made in the Customs Notification but then the callous attitude in respect of the other compliances cannot be questioned just because ego of the policymakers are way too important. The DGFT accepts declarations given by the exporter at the time of filing the application but why the declaration is unacceptable at the time of Bond waiver is very intriguing.
We reproduce the extract from the Declaration given by us:
Quote:
We hereby declare that the goods imported under replenishment clause against Advance Authorisation No. XXX dtd. ZZZ will be utilized in the manufacture of IGST payable goods in the manufacturing facility specified in the Advance Authorisation even after Bond Waiver. This condition is binding on us in respect of the advance authorization as we will avail IGST exemption in respect of the inputs to be imported under the Advance Authorisation.
Unquote:
This declaration is completely correct & binding & safeguards the interest of the department therefore needs to be accepted without any question.
As pointed out earlier, Para 4.16 (ii) of the FTP binds the licencee to utilize the inputs even after completion of the export obligation in the manufacture of dutiable goods whether within the same factory or outside by a supporting manufacturer. The said condition appears in each & every authorization by way of reference therefore binding on the licencee. The said condition appears in the relevant Customs Notification No. 18/2015 therefore binding on the exporter. As a matter of fact, the Customs authorities take a bond from the licencee for the compliance of the said condition to ensure compliance Therefore adequate safeguards are under implementation. Therefore, whether the Central Excise or Chartered Accountant wrongly issues the certificate or not, the licencee is bound by this condition in any case. The repetition of it through a declaration or a wrongly issued certificate is of no consequence at the time of bond waiver.
The persons, who understands the basics of the law will understand that the poor joke is that Para 4.16 of the FTP is condition applicable to each & every licence & appearing in the Customs notification therefore there is no escape from it & the declaration/certificate issued by the Central Excise or Chartered Accountant is of no consequence because violation of any condition specified in the policy/Advance authorization/Customs notification is actionable for penal action both under the FTDR Act, 1992 as well as the Customs Act, 1961 Therefore, by any standard, the demand is frivolous & therefore untenable.
The moot point is that the due diligence exercised by the licencee & the Chartered accountant is of no relevance even if it is established in several ways beyond any element of doubt that Central Excise or Chartered Accountant Certification process is wrong but then it is the problem of the DGFT & not that of the RA, Vadodara. This is how the export promotion authority values the contribution of the exporters & this is then termed as facilitation!
The next frivolous deficiency is in respect of the utilization report. Here again, the demand is frivolous because there is EDI exchange between the Customs as well as the DGFT in existence as on date on real-time basis & the export import data is delivered by the customs & appears in the Bond waiver application. Therefore, the facts of imports & exports are updated on the DGFT website through the message exchange system. You will note that the export data stands transmitted because exports have taken place under the AA but no import data is available because no imports have taken place. If imports had been conducted under the AA, then only the data of imports would be reflected. Please note that therefore there is no reason to get utilization report from the Customs authorities. Once again, the RA, Vadodara official kept harping that the exporters are giving the utilization report therefore it is mandatory.
RA, Vadodara official also pointed out that there is a time lag in the transmission of the data therefore this is called for but then it was pointed to the attention of the RA, Vadodara that the data in the servers is updated at the end of the day everyday & the Bond waiver application is uploaded more than 10 days ago therefore there is no scope to make manipulative presumptions. Then the plea was changed that since this is the first request, you need to get the utilization report & then it was pointed out that once the system approach is adopted, then RA, Vadodara can obtain this from the port of registration through e mail in any case specifically, if necessary. As a licencee, we have given declaration that the data submitted on the server is true & correct & in case of violation this is punishable. Therefore, once again, just by introducing a physical utilization report a backdoor entry for systemic corruption is reintroduced because there is no free lunch in this world. It is in this sense; the utilization report is of significance & all sane pleas fall on deaf ears.
Further, RA Vadodara is simply presuming that imports could have taken place without any basis & another plea is that the message exchange system is not working properly between the DGFT & the Customs department. Please note how it can be possible that the system should not function properly when the Bill of Entry is the most important document for taking the input IGST credit & that data is properly available in the GSTN database. If the data is getting uploaded in the GSTN then why transmission to the DGFT should fail. Finally, it is significant to point out that if everything fails then too the RA, Vadodara can put an overriding condition in the Bond waiver saying that waiver is granted on the basis of declaration by the exporter that no imports have taken place under the advance authorisation & if there is any wrong with the declaration then the customs will revert & not provide the benefit of bond waiver. Therefore, there are several ways possible to facilitate the exporter but then RA, Vadodara is not interested in implementing any one of them.
Priorly the RA, Vadodara asked for Pollution Control Board certificate/Factory License/Latest Electricity to prove manufacturing capacity despite Udyam Certificate & RCMC as Manufacturer Exporter was available on record. Therefore, the harassment is repeatedly taking place & not an aberration & we were compelled to call for appropriate action by the policymakers then too but to no avail.
Further, the RA, Vadodara indulges in diplomacy by writing an email saying that getting an AA is like ordering food on Zomato & the valid points of law raised regarding the Cenvat declaration & utilization certificate will be taken up with the higher authorities but then the RA, Vadodara will not implement & grant valid Bond Waiver & the policymakers do not show any courage to rectify the wrongs or intervene & all this goes on in the name of export promotion & facilitation. The DGFT started computerization in 1988 & this is the state of affairs in 2023 in spite of all the tall claims in the field of software services!
(Author can be reached at [email protected])
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