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COVER STORY: RITES OF PASSAGE
Rites Of Passage
Despite stringent internal controls, the CBEC is
one of the most sullied departments in the country
By Sumit Mitra
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BORDER BOOTY: Attari is among the more lucrative collection posts
for officials
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The
men in white uniform who strut about at the international airports can
be nice fellows if you're an ordinary traveller with nothing to declare.
But the customs officer can switch from the Dr Jekyll role to Mr Hyde's
at a moment's notice. The transformation occurs when the imported consignment
is large, and the duty hinges on how the article is described, how much
of it is measured, or whether the import price shown on the bill is accepted
without questioning.
There may be a monetary lubricant to open every
jammed door of discretion-be it the valuation of an export consignment,
for that will determine the drawback (the cash return as a percentage
of the fob value of export) or the assessment of the import component
of an exports for that dictates the exporter's entitlement for future
duty-free import. Such valuation of exports has given rise to a flourishing
drawback racket in recent times, with a number of domestic polyester manufacturers
claiming drawbacks on a host of quaint exports, including shrimps, diamonds,
even dal.
However, the most handsome favour a customs
officer can bestow on an importer is, of course, to look the other way.
It is said that a wink from the customs inspector at the port can be worth
millions of rupees. It is by buying the enforcer's wink that the perpetrators
of the 1993 Bombay blasts landed with their supplies of RDX. Strangely,
no high-ranking officer was convicted in the case.
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DUBIOUS DISCRETION
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FAULTY SYSTEM: In the Customs Department the check system is top-down
where decisions of officers are vetted by superiors. This doesn't
work if there is vertical collusion.
LAX SURVEILLANCE: Two years ago, the lens of a CCTV camera installed
in the baggage inspection area of Delhi's IGI Airport was blocked
with cement. Last year, a number of X-ray machines became inoperative.
The case of eight missing machines is under a vigilance inquiry.
DRAWBACK MAFIA: The adjudicating power of the commissioner to
assess the value of export consignments for ascertaining the amount
of "drawback" has been freely misused.
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BULK BENEFIT: The value of containers is often misrepresented causing
revenue loss
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The Central Board of Excise and Customs (CBEC),
the empire which B.P. Verma lorded over till last week, comprises a territory
which is much wider than that of customs as it also supervises the collection
of the Union excise duties and that of service tax. Of the total tax revenue
of Rs 1,98,321 crore collected in the year 2000-2001, Rs 1,22,662 crore
came from the establishment under Verma's control. The office of the CBEC
chairman commands 80,000 people, spread over not only the metros and large
cities but in far-flung corners of the country. The Department of Excise,
which accounts for two-thirds of the staff under CBEC, wields power under
the Excise Act which is no less discretion-based than its cousin, the
Customs Act. At the wave of the excise commissioner's hand, a brand of
shampoo can either be treated as a medicinal product with 8 per cent excise
duty or a toiletry attracting 16 per cent duty. However, it is the Customs
Department which is more often in the firing line because of its anti-smuggling
functions. While evasion of excise duties can cause only financial losses
to the exchequer, smuggling is associated with graver risks of narcotics
traffic and terrorism.
The member (anti-smuggling) of the CBEC wields
a lot of clout with the director-general of revenue intelligence (DGRI)
reporting to him. The RI has state-of-the-art telephone tapping resources.
Its chief shares intelligence reports routinely in weekly meetings with
the heads of other intelligence wings. The extent of autonomy enjoyed
by the RI is evident from the fact that much of the leads the CBI obtained
on Verma came from wiretaps laid on his phones by the revenue intelligence
wing. The Customs Department has another layer of internal control in
its vigilance section, with its personnel spread across the custom houses.
It is ironic that the CBEC's image as an organisation
remains sullied despite such impressive internal controls. With some exceptions,
most past chairmen faced investigation either before assuming office or
during their tenures. A former CBEC chief who allowed his lawyer-wife
to practise before the appellate body (CEGAT) for customs and excise had
the reputation of favouring her clients. Yet another CBEC chief was reportedly
instrumental in pre-warning smugglers about impending detention orders
against them under cofeposa. In an excise case against a tobacco major,
it was found that three successive CBEC chiefs had delayed a decision
on the matter, much to the company's delight.
Lower down the hierarchy, the ranks are full
of pure mercenaries. Two years ago, when a CCTV camera was installed at
the baggage inspection area of the IGI Airport, some insiders promptly
blocked the lens with cement. The baggage belt X-ray machines are deliberately
put out of operation by corrupt customs inspectors.
On the list of officers against whom the Central
Vigilance Commission (CVC) has recommended major penalties, CBEC occupies
a high place with 47 names. The IRS Association of Customs and Excise,
which is irked by the recent media glare on the service because of the
Verma case, argues that the public has ungratefully forgotten that the
tax collection cost in India is among the lowest in the world, being less
than a rupee for a collection of Rs 100. In popular perception, however,
for every hundred rupees earned in taxes, the nation loses at least Rs
25 in taxes evaded.
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