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Friday, February 11, 2011

What is behind Finance Ministry's notification exempting duty for BCCI imports for World Cup 2011

For the fans, there are only 8 days to go for the biggest carnival – newspapers are ripe with news, views, analysis and interviews of everyone  who has had some connection to cricket.  There are some papers which devote lots of space for views of celebrities who perhaps would never watch cricket or know nothing of the game.

It is all hype and glitz of the media – you might get increasingly frustrated as the advertisement goes on air when the bowler is about to deliver the sixth ball of an over – sometimes you are left in anxiety to know of its fate – then an advt. break – forced to watch 3 or 4 products which you might never like to use in life.  The broadcast starts an hour or two before and some keep on talking – all only to push in more advertisements.  There are advertisements running on the band on the lower panel, higher panel, side panel – sometimes the match itself appears in the middle inside a small box – what are you watching – the game or the product promotion ?

The cost is heavy – some say that for 10 sec ad slot in the prime it is more than 3 lakhs and it would go up if India were to reach the Semis and Finals.  So the advertisers want India to win !!!!!

There are a couple of advertisements which have garnered attraction.  Global Soft drink Pepsico have unveiled 6 new flavours of Lay potato chips named after India, Lanka, WI, Australia, England and SA.   An ad campaign featuring Saif Ali Khan and MSD is on. That would make the children force their parents to buy all the 6 flavours.  The other one is very attractive indeed.

It is high decibel innovative ‘ change the game ‘  - game not by the book but by what one does in nativity.  Pepsi is trying to cash in by promoting what is called unorthodox things in the game.  It is Viru’s upper cut, Dhoni’s helicopter shot, bhaji’s doosra, Dilshan’s scoop, Kevin Pietersen’s switch hit.

The film showing what MSD had to practice in his rustic style in village in hand water pump and how it transforms to ‘helicopter shot’ – a shot hit over covers with a flourish of the bat follow up in rather unusual style of flinging arms and rotation of bat as if helicopter’s blades is indeed amusing – so also is the ball exercise and transformation into Kevin’s switch hit.  When MSD played this helicopter shot on playing arena and succeeded does not come to mind immediately but following the launch of the advertisement, there are newspaper reports that Dhoni played some during the practice session at Bangalore and hit the ball soaring over the field.

All that is fine and good for entertainment.  Sports is a treat and good entertainment source and has to stop there.  The backbone of the Nation should be agriculture and Industry should be the one driving the economic growth.  There are thousands aspiring to run an industry profitably and the industrial growth will help the Nation building. From time to time, industrialists run into trouble with Customs Authorities on appropriate taxation and hassle free import.  The Customs Authorities duty is to ensure that no banned substance finds its way into India, the Indian industry does not suffer due to dumping of foreign goods and that revenue is generated as appropriate with the goods imported into India.  There are  clear policies developed over the year and the list of dutiable goods is wide barring a few like food grains, fertilizer, life saving drugs and equipment etc.   

The Govt.  must ensure that no individual or Group get undue advantage, evade taxes or have policies tailored to suit their requirements.   In Jan 2011, Govt. of India derecognized BCCI as a National sports body as details of electoral process, duration of tenure of officials, statement of accounts etc., were not submitted.  BCCI put up a brave face stating that it was an autonomous body affiliated with the ICC and that they will not bow to the pressure to register with the Govt.  immediately, the Finance Ministry denied customs duty exemption.  BCCI had been enjoying immunity and not paying taxes on their imports for long.

BCCI is no Govt.  body and is in fact a society registered under the Tamil Nadu Societies Registration Act.  Shashank Vyankatesh Manohar, a prominent lawyer is the current president of the body. N. Srinivasan, who owns the IPL team Chennai Super Kings, is the secretary.  The powerful board often uses government-owned stadiums across the country at a nominal annual rent. BCCI are not required to make their balance sheets public.  The BCCI has access to so many resources and has been making money.  The staging of WC is bound to make it coffers filled with more money. Read my earlier post on this also :  BCCI and customs duty.  The Customs rules have been carefully and minutely drafted to ensure revenue generation besides other aspects.   Many industrialists have faced problems arising out of imports of their essential needs and some have become the subject matter of litigation also.

The Govt. (as was expected) took a U turn and has now allowed  zero duty import of sports and broadcasting equipment by BCCI for the World Cup . A special notification of the Finance Ministry how states that “the Central Govt. has exempted the (specified) goods...when imported into India for the purpose of organising the ICC World Cup 2011, from the whole of the duty of customs leviable...,"  - which includes sport equipment; medical instruments; photographic and audio-visual equipment; broadcast equipment and supplies; and computer and other office equipment.   The concessions come within three weeks after the Centre had withdrawn customs duty exemption on import of goods by the BCCI or bodies certified by it, following non-compliance of mandatory requirements.

It is stated that importers will have to furnish a bond for the value of the imported goods supported by a bank guarantee to the extent of 25 per cent and the goods will have to be re-exported within three-months from the date of official closure of the World Cup.  The imports and the subsequent re-export would be allowed from the sea ports at Mumbai or Chennai, Inland Container Depot at Tuglakabad. The imports would also be allowed from airports at Mumbai, Chennai or Delhi.

Cricket at best is a Sport and entertainment and why  should the Nation except millions from duty to a cash rich board ?  The Event’s publicity and promotional material and signage are certainly not essentials for the common man.  Where is the need for materials like the 'thundersticks' (the inflatable 'sticks' banged together during games) and signs held up by the crowd after every four or six ?   Why the Govt. chose to forego million dollar is itself a million dollar Question.  

For the Nation already replete with so many scams getting reported everyday in thousands of crores, this may not add up in a very big way.  Whatsoever be Cricket’s value as a game of entertainment capable of momentarily stopping the heartbeats of millions,  it does not deserve any exemption and special benefits from the Government.    These tax evasions and exemptions would indirectly burden the common man in some manner increasing the price of essentials. 

Regards – S. Sampathkumar.

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