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CED on sugar export to India

CBR seeks explanation from H'abad collector

SOHAIL SARFRAZ

ISLAMABAD: The Central Board of Revenue has asked the Hyderabad Collector of Central Excise, to explain why central excise duty and penalty was not demanded from the mills in Sindh when export of sugar to India was taking place.

It is learnt that the Board has clarified to the high-ups of the Customs House that there is no legal bar on export of sugar to India.

CBR has instructed Collector Hyderabad to examine the issue and submit a detailed report immediately on the legality and propriety of orders of Additional Collector (CE) Hyderabad about the provisions of Central Excise Act, 1994.

According to sources, Pakistan Sugar Mills Association (PSMA) has strongly protested against the issuance of show-cause notice in September 1999 to the sugar mills of Sindh within the jurisdiction of Hyderabad Collectorate of Customs and Central Excise.

Sources at the CBR said that the Additional Collector of (CE) Hyderabad has raised demand of central excise duty on export of sugar to India under the provisions of SRO 547(I)/96 of July 1, 1996, which explains that no rebate of CED shall be granted in case of goods exported from Pakistan by land, export of consumer goods to any country, in retail packing, bearing the retail price in Pakistani rupee and export of excise dutiable goods in retail packing not printed, in bold letters, with the words 'For Export Only' Not For Sale in Pakistan.

In a communication to Ministry of Finance, the Pakistan Sugar Mills Association (PSMA) has said that the Additional Collector has issued show-cause notices under rule 12 of the Central Excise Act in conjunction with SRO 547(I)/96. The Additional Collector has erred in his reference and interpretation for raising demands of recovery of CED, additional duty and contemplation for penalty "for violation" of the CE Law and Act, PSMA maintained.

The letter further said, "the Additional Collector has referred to sections, rules, procedure relating to rebate. Exemption and rebate bear no identical connection, as seems to have been decided by the AC. Rebate refers to refund of precise and definite payment made earlier on the account being referred to. So is not the case in this instance".

PSMA further said that sugar exports were cleared under AR-3 under section 13-A, for which bonds were surrendered by the sugar mills and these were returned by the Central Excise Department on submission of evidence of exports, as according to the set procedure for the purpose. All was so said and done without any objection or hassle, completing all relevant formalities under the laws and rules, as the case could be.

The Association also pointed out in the letter that sugar exports were initiated during 1998 under a "memorandum of understanding" signed between Finance Secretary, Chairman CBR, Chairman PSMA and Secretary General PSMA.

The MoU provided for export of sugar by sea or rail routes. It provided for incentive of Rs 3,000 per tonne in addition to the existing facility of zero-rating of CED, zero-rating of sales tax and export drawback of Rs 1,5000 per tonne of sugar exports. The MoU set out a specific procedure for sugar exports, Association maintained.

Ministry of Finance was further informed by PSMA that in view of the above categorical arrangements, besides erred reliance on rules, act and law of CED by the AC, the action under way by the AC, Collectorate of Customs and Central Excise, Hyderabad is out of context and misplaced.

The letter said that the matter has become urgent for disposal as the Superintendent, Custom and Central Excise, Khokhrapar Circle, Mirpurkhas has already initiated the recovery process, after the order passed by the AC, Customs and CE, Hyderabad against Mirpurkhas Sugar Mills Limited.

Proceedings initiated by AC, be at any stage may kindly be stopped forthwith as it is bound to create uncalled for legal pursuits and its unwarranted complications. Kindly note that sugar exports were undertaken after categorical exemption of CE, sales tax and other supportive elements were precisely prescribed for it, the letter ended.