Forex

THE Government is taking a "relook" at the eight per cent excise duty clamped on branded refined edible oils and vanaspati in Budget.

"We have recognised the problems surrounding the imposition of excise duty on branded edible oil industry. We are having a relook at it. As it is a matter of the Finance Bill, the necessary changes would have to be announced by the Finance Minister in Parliament," Mr M.K. Zutshi, Chairman, Central Board of Excise and Customs (CBEC), told newspersons on the sidelines of a FICCI seminar on `Implications of Finance Bill, 2003'.

The Finance Ministry sources said that the Government has budgeted tax collections of "about Rs 800 crore" in 2003-04 from the duty imposition on branded refined edible oils and vanaspati industry.

On the other hand, Mr Zutshi ruled out the restoration of exemption from service tax on payments received in convertible foreign exchange.

"There is no reason why service tax should not be paid on such forex earnings. We are only levying service tax on services rendered within India (excluding Jammu and Kashmir). Income is income. In the same vein, exporters of goods will start demanding that their export income should not be taxed at all. We have so many holy cows," Mr Zutshi said in his address in response to industry demands for restoration of exemption.

Mr Zutshi also urged industry to adopt standard accounting practices and cooperate with the CBEC in fulfilling their tax obligations. "In indirect taxes, we are seeing cases of deliberate cheating across the board and even by multinational corporations. That is why we are being forced to have an elaborate system. There has to be some element of ethics in business dealings," he said.

On business ethics, Mr Zutshi highlighted the practices adopted by some of the players in the pharmaceutical industry. "I really don't know what to say or what kind of ethics is this. Pharmaceutical companies are offering an Opel Astra and other luxury cars to doctors if they continue to prescribe a particular drug for say a year's time," he said.

He added that the pharmaceutical industry was in a way responsible for the Supreme Court judgement that brought in the concept of undue enrichment in tax laws.

Mr Zutshi said later told presspersons that the CBEC would be able to "reach the revised estimates" for 2002-03 in respect of both Central excise and customs duties.

The revised estimates for Union Excise duties for 2002-03 stood at Rs 87,383 crore. In the case of Customs, the revised estimates for the corresponding period are pegged at Rs 45,500 crore