PMO not okayed Najib Shah for CBEC chief, yet

Under Najib Shah, directorate of revenue intelligence had sent notices to Adani group companies for alleged violation of custom valuation norms

Uncertainty prevails over the appointment of Najib Shah as chairman of the Central Board of Excise and Customs (CBEC) as the file recommending his name has not been cleared by the Prime Minister’s Office (PMO), even two months after Shah’s taking charge as the acting head of the CBEC.

Shah’s name was recommended by CBEC after Kaushal Srivastava retired on June 30, but was returned by the PMO seeking three-four names to fill up the chairman’s post.

Responding to the PMO’s query, official sources said the file was sent back to the PMO with Shah’s name again, as he is the senior-most member of the board. The PMO is yet to respond to that.

“The norm is that the senior-most board member becomes the chairman. But the PMO asked for a few names to be suggested and not just one name. We do not know the reason, but the appointment is stuck for over two months now,” said an official source on condition of anonymity.

Shah joined the CBEC as board member for the Budget in April. He is currently the ‘acting chairman’ of CBEC, besides his responsibility as CBEC member. He has been functioning through the member’s room, while the CBEC chairman's room remains vacant in the North Block.

CBEC, comprising a chairperson and up to six members, is the apex body for framing policy and administrative issues related to indirect taxes - customs, service tax and central excise duty. It falls under the finance ministry’s revenue department.

When he was the director-general (DG) of the Directorate of Revenue Intelligence (DRI) during October 2012 to March this year, Shah had come down heavily on tax defaulters, detecting various tax and duty evasion cases. Under Shah, DRI had sent notices to Adani Power Maharashtra and Adani Power Rajasthan on May 15, 2014 for alleged violation of custom valuation norms by the two, while importing capital equipment for power projects from a United Arab Emirates-based supplier. CBSE had sent a show-cause notice for alleged over-valuation of imported machinery by Rs 2,000 crore.

Shah had also flagged the possibility of income tax evasion by the Adani group in early 2014 by allegedly inflating the cost of imported machinery, resulting in a higher claim for tax depreciation.

Adani Power is the largest private power producer and a sister company of Adani Ports. Collections from indirect taxes witnessed a substantial growth of 36.5 per cent during April-August at Rs 2.63 lakh crore year-on-year. The Budget has targeted the growth of 19 per cent for 2015-16. Much of the growth in the first five years came from an increase in excise duty on petroleum in four phases since October last year, withdrawal of excise duty concessions from auto, consumer durables since January this year and a hike in services tax rate from 12.36 per cent to 14 per cent from June this year.