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Minutes of All India Conference of the Chief Commissioners and Directors General of Customs, Central Excise and Service Tax Held on July 17-18, 2013
An All India Conference of the Chief Commissioners and Directors General of Customs, Central Excise and Service Tax was held on 17-18 July, 2013 in New Delhi. The Conference was inaugurated by the Hon'ble Finance Minister Shri P. Chidambaram. Shri Jesudasu Seelam, the Hon'ble Minister of State for Finance (Revenue), Shri Namo Narain Meena, Hon'ble Minister of State for Finance (E&FS), Dr Parthasarathi Shome, Advisor to the FM and Shri Sumit Bose, Revenue Secretary graced the occasion.
2. The Hon'ble Finance Minister, during his keynote address, congratulated the officers on achieving the revised revenue target in the financial year 2012-13. He mentioned that in the current financial year, the targets have been fixed for each of the indirect taxes namely Central Excise, Customs and Service tax after careful estimation. He further emphasised that the target for the year 2013-14 had been fixed at 19% which is below the growth achieved last year which was 21%. He, therefore, expressed the hope that officers would leave no stone unturned in meeting the assigned target for the current year.
[Action: All Chief Commissioners]
3. As regards the revenue target of Customs, the FM stated that the Indian currency has devalued around 13% and, therefore, this factor itself should be enough to achieve the revenue target in Customs. He urged the officers to not only achieve but to exceed the Customs Duty collections target. With reference to Central Excise target, he urged the Chief Commissioners and Commissioners to closely monitor the assessees and forge a close relationship with them. He stressed upon the need for senior officers to have regular interaction with the junior officers as well as the trade to have a close watch on the potential evasion of Central Excise Duty. He stated that the Central Excise growth of 11.9% is achievable provided all steps are taken in that direction. The Hon'ble Finance Minister further noted that Service Tax revenue is bound to increase in future as it has shown steady growth so far. He urged the officers to make the Voluntary Compliance Encouragement Scheme of Service Tax a success by increasing the trade awareness through Chambers of Commerce and other associations. FM directed to carryout a massive media campaign by having a logo like VDIS to educate and encourage maximum non-filers/stop filers & wrong filers to avail the Scheme. He emphasised the need for focusing on eight major cities namely Delhi, Mumbai, Chennai, Kolkata, Bangalore, Hyderabad, Ahmadabad and Pune to sensitize the trade regarding the scheme. He also desired to visit these cities to address specially organized seminars on VCES for trade bodies in the months of Sept & Oct, 2013.
[Action: All Chief Commissioners/Commissioner (DPPR)/
Commissioner (Service Tax)]
4. The Hon'ble Finance Minister also expressed happiness with the progress made in implementing various directions which he had given during last Chief Commissioners' Conference in August, 2012. He also referred to the remarkable work being done by the Directorate of Systems, which he had observed during the visit to NOC. Finally, the FM advised the Board Members to visit field formations and meet the Chief Commissioners / Commissioners and trade to get a firsthand feel of the issues. The Hon'ble FM concluded by reminding the officers that revenue target would be expected to be achieved and officers must take every possible action to achieve the same. The Hon'ble FM assured the department that the Cadre Restructuring proposal of CBEC would be pursued vigorously.
[Action: All Board Members/All Chief Commissioners]
5. Hon'ble Minister of State (Revenue), Shri Jesudasu Seelam, during his address (on the occasion of the 2nd B.N.Banerji Memorial Lecture), appreciated the Department for carrying out its tasks in a responsible manner. He called upon the officers that besides tax collection, they have to be good human beings, and play important role in the Nation building. He emphasised that despite challenges before the Indian economy, targets are achievable and CBEC must make all efforts to achieve the targets. He advised officers, particularly Chief Commissioners, to visit field formations, to have the idea about ground realities and understanding of various issues. The Minister mentioned that officers have 200 days to bring the good results and they should make all possible efforts to fulfill Hon'ble FM's agenda. He underlined the need for wider publicity to Voluntary Compliance Encouragement Scheme (VCES) for Service Tax, while He highlighting the significance of VCES. He expressed hope that the department would continue to take progressive steps such as pilot RMS on exports.
[Action: All Chief Commissioners/Commissioner (DPPR)]
6. Shri Sumit Bose, Revenue Secretary, in his address, complimented the department for realizing revenue above the revised target in 2012-13. However, he pointed out that the tax to GDP ratio of 4.7% is lower than the ratio of 5.8% achieved in 2006-07. He hoped that the Conference will come out with measures to achieve the revenue targets this year. He called for a zero tolerance approach towards corruption and need to ensure placing officers of proven integrity in sensitive posts. He expressed optimism that the cadre restructuring should be able to address staff shortage. He mentioned that CBEC will continue to play a central role in GST and called for active inputs of the department in the process of formation of GST.
[Action: All Chief Commissioners/DG (HRD)/
7. In her address, Ms Praveen Mahajan, Chairperson (EC) highlighted the major achievements of the department in the last one year including the notable achievement of the department in surpassing the revised revenue targets by Rs. 5,500 crore in 2012-13 with a growth of 21.1% over previous year; collection of arrears of revenue of 13,200 crore ; audit recovery of Rs.3,003 crore and preventive / anti-evasion detection of Rs.13,600 crore, all significantly higher than previous year's achievements. Thanking the Finance Minister for his support for the cadre restructuring proposal and the MCTP course, she assured that the department will put their best foot forward in achieving the present year's targets.
[Action: All Chief Commissioners]
8. The Chairperson outlined various initiatives taken by the department such as launch of 24x7 functioning at 17 Customs locations, pilot RMS for exports, etc. She pointed out that the vast expertise and domain knowledge of the department in indirect tax administration can be effectively leveraged in smooth implementation of GST. She concluded her address by assuring Hon'ble Finance Minister that the entire CBEC shall work towards meeting, rather exceeding the revenue targets with unwavering determination and focus.
9. Ms J. M. Shanti Sundharam, Member (CX), gave a presentation on review of Action Taken Status of each the decisions taken in the CC conference held on 28.08.2012. It was stated that actions have been taken with respect to all the recommendations. In respect of one of the recommendations concerning development of modules for e-payment of refund for Central Excise and Service Tax, action will be completed by January, 2014.
10. Thereafter, a presentation was made on "Additional Revenue Mobilization (Steps and Implementation)" by Shri C. S. Prasad. Chief Commissioner, Mumbai Customs-II. The presentation covered a brief overview of the revenue collected and the revenue growth in the last 3 years and measures required for mobilization of additional revenue for the current year. The presentation was followed by discussions on various measures required for revenue mobilization. Following points emerged from the presentation:
(i) A reference was made about the undervaluation and mis-declaration of the imported goods due to incomplete description and non-standard Unit Quantity Code (UQC). It has been decided to implement mandatory UQC to obviate potential for undervaluation and mis-declaration and thus ensure correct assessment. It was recommended that Directorate General of System should provide additional fields in B/Es allowing importers to give complete information in standard UQC.
(ii) At present, benchmark pricing has been done for 23 commodities. It was recommended that benchmark pricing may be introduced for sensitive commodities prone to under-valuation by the Directorate General of Valuation.
[Action: DG (Valuation)]
(iii) It was pointed out that in the first quarter of the year, drawback refunds have increased by 47% as compared to last year. It was observed that drawback under All Industry Rate is fixed in terms of 'Indian Currency' and hence, drawback refund outgo will be high despite the decline in the export due to depreciation of Rupee. Hon'ble FM directed that All Industry Rates be re-fixed considering the devaluation of Indian currency and the revised rate should be made effective from 01.04.2013.
[Action: JS (DBK)]
(iv) Reference was made about the increasing trend in Cenvat credit utilization leading to adverse PLA-CENVAT ratio. It was informed that a group headed by Chief Commissioner Central Excise, Chandigarh, has submitted a report on higher utilization of Cenvat credit. Hon'ble FM directed that the report of the Committee, as also the report of the Committee on Duty Forgone, may be examined and considered within a week's time.
[Action: CC ,C.Ex., Chandigarh/ CC,Customs,Mumbai-I/JS(Dbk)]
(v) It was also suggested to increase rate of duty for 'pan masala' and 'gutkha' in view of the installation of new machines with higher packaging capacity. It was decided that DGCEI will examine the aspect of increased speed of the machine and will submit a detailed proposal regarding revised rate of duty by the end of July 2013.
(vi) It was recommended that tariff value under section 3(2) of the Central Excise Act be fixed for certain items which are sold in retail at retail price but are not covered under MRP based assessment under Section 4 A. Hon'ble FM desired that such action should be taken in respect of high value branded items only.
[Action: JS (TRU)]
(vii) It was observed that there is a high level of pendency of adjudication in Service Tax in Mumbai and Delhi Service Tax Commissionerates. It was recommended to post Commissioner (Adjudication) at Mumbai and Delhi to liquidate the said pendencies.
[Action : DG(HRD)/JS(Admin)]
(viii) It was noted that at present about 11 lakh returns, thrown up for Review & Correction in the preliminary scrutiny process, are pending for correction. In this regard, FM directed the DG (Systems) to submit a report on the reasons for the large pendency and measures to be taken for reducing the same, by system-driven scrutiny process of returns, thereby having only a small percentage of cases for detailed manual scrutiny, within a week.
(ix) It was recommended that the mandate of DG (Service tax) should be enhanced and it should be assigned the work relating to intelligence and anti-evasion. On being asked by the Hon'ble FM about any such proposal, it was stated by DG (Service Tax) that a proposal on these lines has been submitted in August, 2012.
(x) The issue of shortage of manpower at different levels including Inspectors and TAs was also raised as it affects the revenue collection adversely. Hon'ble FM directed that the matter should be taken up with the UPSC Chairman for carrying out ad-hoc promotions urgently, if regular promotions are not feasible.
11. The B.N. Banerji Memorial Lecture was delivered in the afternoon session on 17th July. Ms. Sandhya Baliga, Member (Customs) while welcoming Dr. Raghuram G. Rajan gave background of Late Sh. B. N. Banerji, Founder Chairman of CBEC in whose memory the lecture series was started last year. Dr. Raghuram G Rajan, in his lecture on "State of the Economy: Prospects and Opportunities", identified three factors responsible for the present slow growth rate of economy as; Global scenario, governance issues and fiscal policies in the past. Highlighting the steps taken in last year to control inflation, Dr. Raghuram G. Rajan explained three pronged strategy of Government i.e. get growth, bring down inflation and cut current account deficit. Dr. Rajan outlined the importance of growth having four components, namely, Building Infrastructure, Simplify Regulations, Financing, and Skill Development & Education. His lecture was followed by question-answer session which was moderated by the chief guest Shri Jesudasu Seelam. MOS(R). The Hon'ble MOS (R) appreciated the excellent lecture and also mentioned that despite various issues, India has grown and steps have been taken to ensure growth with equity.
12. On the second and concluding day of the Conference, Dr. Pritam Singh, Padma Shri, Director General, International Management Institute, New Delhi addressed the delegates and spoke on the subject "Transformational Leadership in 21st Century". He dwelt upon five major crises prevailing presently namely Leadership and Governance Crisis, Ecological Imbalances, Water Crisis, Ethical and Value Crisis, and Emergence of 'Me' Culture. He also explained the seven mantras of great leadership which inter alia include Himalayan Dream and Vision, Contribution to Society, Respect for Subordinates, Compassion, and Others. Ms Praveen Mahajan, Chairperson, CBEC thanked the guest for the thought provoking lecture on leadership, which was well received by the audience.
13. During two days of the Conference, several presentations were made on functioning of the CBEC. On the first day of the Conference, there were presentations on 'Vision for IT Infrastructure for CBEC', 'GST', 'GSTN', 'Working of COIN Offices' and 'Directorate of Logistics'. The Presentation on 'DRISHTI' - Driving Information Systems for Holistic Tax Initiatives, outlined the journey from distributed IT Systems to Centralized IT Infrastructure. It outlined the CBEC's vision for IT as a world class IT infrastructure for an intelligence and technology based, non-intrusive Indirect Tax administration designed for effective enforcement of cross border controls for national security, promoting voluntary compliance and deterring non-compliance seamlessly integrating all three streams of Indirect Taxes, and providing for appropriate exchange of information with other administrative and regulatory authorities. It covered the four key components of the IT strategy, namely; business, applications, technology and data. It was recommended to constitute a High Power committee to examine all issues to evolve appropriate roadmap to achieve this vision.
The presentation on GSTN focused on three main aspects, namely; GSTN, GST Pilot Project and the Committees for implementation of GST. The presentation on GST covered the salient features of GST, Present Structure of GST and Role of CBEC in its implementation. The presentation highlighted the broad contours of the proposed GST regime and the complex issues to be resolved. View was expressed by some participants that if there is a regular update about the status of GST through website or other means, it would greatly help towards positive and participatory approach from the field formations.
14. The presentation on Working of COIN Offices covered an overview of the set up, locations and jurisdictions, selection process, notable achievements and also the procedure for making overseas enquiries. The presentation on Directorate Of Logistics covered Anti-Smuggling Equipments, Marine Vessels, Telecom Equipments, Arms & Ammunition etc. The concerns regarding longer implementation period of Scanners and lack of availability of trained manpower were also discussed. During the discussions, it was decided that the installation of container scanners at Mumbai, Chennai, Kandla and Tuticorin, will be monitored closely by the Project Implementation Committee at the field level. Further, requirement of berthing space will be followed with the State Maritime Boards, and Ministry of Shipping.
[Action: Concerned CCs/Commissioners/
Commissioner (RI&I)/ Commissioner (Logistics)]
15. Second day of the Conference saw presentation on Dte. of Human Resource Development. The presentation on HRD was in four parts viz. Infrastructure Development, Staff Welfare, APAR Management and Expenditure Management. The emphasis was made on optimal use of physical assets owned by the department, timely submission of proposals, online tracking of welfare proposals, etc. Presentation on Dte. of Export Promotion covered Export Oriented Unit Scheme, Specific Economic Zone Works, Gems and Jewellary Export Promotion Schemes, Software technology Park Scheme and Electronic Hardware Park Scheme.
16. The presentation on Dte. Of Legal Affairs covered the pendency of cases before appellate authority and the judicial fora and success rate of the department. The presentation also covered the reasons for low success rate and the common deficiencies noticed in proposals for filing SLP and Civil Appeals. Measures taken to streamline and cut-down frivolous litigation were also discussed.
17. In continuation of our attempt to introspect and put in place the building blocks for the Department's strategy in the coming years, two breakaway groups analysed the issues in detail, identified key areas and based on the lessons from the past experience, the groups attempted to chart the road map for the future. First breakaway group deliberated on 'Tax Administration Reforms". The group proposed certain requirements which can be divided into two categories (i) Requirements relating to the business process, and (ii) Requirements relating to the organization structure. The group made various suggestions with regard to use of information technology, simplification of procedures, re-organization of CBEC works, dispute resolution, etc. The group recommended self sealing of export containers by the exporters themselves and doing away with the sealing of export containers by the departmental officers. The group also recommended creation of Dte. Of Taxpayer Services under CBEC.
18. The second breakaway group on "Way Forward ; Service Tax" presented the challenges posed by the enormous growth in Service Tax. The breakaway group mentioned two responses to the challenges arising in Service Tax in the form of administrative responses and technical responses. Recommendations on administrative side include creation of 4 new Service Tax Zones and 15 new Service Tax Commissionerate and also Audit and Appeal Commissionerate. The group also highlighted the high pendency of adjudications in the Service Tax Commissionerate and recommended 4 posts of Commissioners (Adjudication). The group recommended creation of a separate Service Tax Intelligence Organization and also creation of Specialized Groups under Service Tax Commissionerates. The group, in addition, also recommended several legislative changes.
19. During the second day of the Conference, an Open House was held under the chairmanship of the Hon'ble Minister of State for Finance (R). Secretary (Revenue) and Chairperson, CBEC alongwith other Members of the Board were also present during the Open House. The following questions were raised during the Open House:
(i) Chief Commissioner, C.Ex., Shillong raised apprehensions about the role of IRS(C&CE) Service post GST regime. The Hon'ble MOS mentioned that there is a requirement of harmonious relations with the States as they are major stakeholders in the GST. It was further stated that the CCs can give their feedback and suggestions in this regard to the Board. Secretary (Revenue) mentioned that there should not be any cause of worry and in the proposed cadre restructuring, all such issues have been taken care of.
[Action: All Chief Commissioners]
(ii) Chief Commissioner, C.Ex., Mysore suggested that the present exemption limit of Rs.1.5 crore may be brought down to Rs.50 lakh before changeover to GST regime. Secretary (Revenue) replied that this is an important issue and requires detailed examination.
(iii) Chief Commissioner, C.Ex., Jaipur raised the issue of difficulties in posting of officers according to the policy of sensitive and non-sensitive charges and requested for re-examination of the policy in view of the directions to post only officers of impeccable integrity at sensitive places. He also raised the issue of old instruction on purchase of "Desktop Computers' which does not make provision for purchase of "Laptops". He requested for suitable modifications in the old instruction. It was decided that the instructions need to be revisited.
[Action: DG (Vig)/DG (HRD)]