Govt determined to revert to the path of fiscal consolidation at the earliest: FM

EARLY GREEN SHOOTS OF ECONOMIC RECOVERY VISIBLE: FM

FM EXHORTS CBEC TO ADOPT INNOVATIVE AND DYNAMIC WAYS TO MEET REVENUE SHORTFALL

FM INAUGURATES ANNUAL CONFERENCE OF CHIEF COMMISSIONERS & DIRECTORS GENERAL OF CUSTOMS AND CENTRAL EXCISE

Finance Minister Shri Pranab Mukherjee inaugurated the two-day Annual Conference of the Directors General/Chief Commissioners of Customs, Central Excise & Service Tax here today. Following is the text of Finance Minister's speech delivered on the occasion:

"Minister of State for Finance, Sh S.S. Palanimanickam, Revenue Secretary, Chairman & Members of the Central Board of Excise and Customs, Ladies and gentlemen.

I am very happy to be with you all on this important annual event. The conference is an occasion to take stock and to put the Department's collective wisdom to the task of improving the functioning and the image of the indirect tax set up under the Central Board of Excise and Customs.

This Conference is being held at a crucial time. While we see a gradual thaw in the winter of economic crisis and the early green shoots of economic recovery, the situation is still far from normal. India's export to its major traditional markets in the developed economies has contracted in the last ten months. In order to combat the downturn in economy, the Government has announced a slew of measures, including reduction in indirect taxes, to put more money into the hands of the consumers. In this year's Budget, in tune with the Government's commitment towards inclusive growth, there have been larger financial outlays in social sectors like health, education and for improvement of rural and urban infrastructure. The deficient monsoon has raised a spectre of drought in large parts of India. The Government has to be prepared to take all ameliorative measures which will also have significant financial implications. The fiscal deficit is presently on the higher side and the Government is determined to revert to the path of fiscal consolidation at the earliest.

In this sombre backdrop, I need not emphasize the crucial role of the officers of Central Board of Excise and Customs in shoring up our economy. I note with satisfaction that the tax base of the indirect taxes has grown steadily and as a share of GDP has gone up from 9.2 % in 2003-04 to 12.6 % in 2007-08. However, a matter of worry is that indirect tax receipts during 2009-10 (upto July 2009) have shown a negative growth of 28% as compared to the last year. No doubt, this trend reflects the overall slowdown of the economy and the effect of stimulus measures through reduction of Central Excise duty rate. But my expectation is that despite such limitations, the Central Board of Excise and Customs will adopt innovative and dynamic ways of meeting the revenue shortfall.

As we rapidly integrate with the global economy, the role of Customs and Central Excise officers has to be redefined. They are as much facilitators of trade as tax collectors. CBEC's role is multi-faceted. It is one of the largest contributors to the central government revenues. While Central Excise continues to be the bulwark of indirect tax collection, Service tax is the new sunrise area for widening the tax base and improving revenue collection. The role of Customs as revenue generator has diminished, but its role in facilitation of international trade continues to grow. We need to focus on continuous reduction in dwell time and transaction cost for export and import so that the Indian industry gains an extra edge to compete in the world market. Further, it not only has to meet its traditional challenges of combating smuggling and commercial fraud, but has to respond to new challenges in areas as diverse as environment protection, transborder movement of goods having a bearing on national security and international negotiations in multilateral and bilateral fora.

Needless to say, such a multidimensional professional demand requires a paradigm shift in the way the Department functions. In this regard, I am very glad to note the large-scale use of Information Technology in the Department's day-to-day functioning. Equally heartening to note is the use of modern gadgets like container scanners and baggage scanners at ports and airports to detect smuggling in a more non-intrusive and real time basis. All this not only reduces public interface but also provides more efficient and scientific basis for improving tax compliance and enforcement measures. I believe, the introduction of Risk Management System at main customs stations has considerably reduced dwell time of goods at ports and airports. In this regard, I congratulate the Department, and the officers of the Directorate General of Systems, for winning the Prime Minister's Award for Excellence in Public Administration for the year 2007-08 for 'Implementation of Risk Management System in Customs.'

Notwithstanding the laudable achievements of the department, there is scope to do much more. The officers at all levels need to be sensitized to the fact that they are facilitators and not just regulators. The tax payers need to be treated with dignity and dealt with in a fair and transparent manner. To this end, I look forward to meaningful implementation of the key components of 'Sevottam', namely the Citizen's Charter and the Public Grievance Redressal Mechanism. It is also important to ensure that the ongoing programmes concerning use of Information Technology and acquisition of modern equipments are completed as per schedule. It is also my expectation that the Department will play its rightful role in enhancing border security to curb the menace of smuggling, particularly of Fake Indian Currency Notes. With better availability of data, I also hope that the senior officers of the Department will be able to monitor the performance of the field formations more effectively and also provide more qualitative inputs with regard to administrative and policy initiatives.

As you are aware, I have announced in my Budget speech that we intend to introduce a dual GST- for Centre and State separately by 1st April, 2010. The contours of administering GST will be known to you soon. I am sure CBEC will be well prepared to meet the challenges arising out of introduction of GST. I expect the Chief Commissioners to rise to the occasion and ensure its smooth implementation.

Equally important is the need to create a system of administration which is transparent, fair and conducive to realisation of the full potential of the officers at all levels. In order to improve professional efficiency, regular training of officers at every level needs to be given high priority. While corrupt elements should be dealt with sternly, the process of vigilance enquiry should not itself take the form of punishment. Such inquiries must be disposed of in a time bound manner. CBEC is one of the biggest litigants in the courts. Steps need to be taken to reverse this trend - this should start from the point of departmental adjudication and at every stage, emphasis should be on judicious decision making.

I am confident that you will all rise up to the challenges ahead. I hope that you have fruitful deliberations over the next two days and at the end, your combined wisdom and experience will result in distilling out actionable points to improve the performance of the department on all its parameters. I wish you all the best."