Following is the text of the Speech of Finance Minister, Shri Pranab Mukherjee delivered on the occasion of Central Excise Day Celebrations and Investiture Ceremony, here on wednesday:

“At the outset, let me congratulate the 33 officers, who have been selected for the Presidential Certificate of Appreciation for the year, 2009. An award such as this recognizes the exceptional diligence, dedication, and abiding faith of officers in their service to the nation. While the Department works towards a transparent and fair tax administration, awards such as these rightly reward those striving towards excellence.  I am happy to know that CBEC has a healthy tradition for recognizing the performers, which acts like a catalyst for others to perform.

Today, we also commemorate the enactment of the Central Excises and Salt Act on 24th February, 1944. The Central Government requires revenues for socio-economic development, and central excise has always been an important source of developmental finance of the country. It has played an important role in creating an enabling environment to sustain the momentum of economic activity in the country. The Centre’s revenues have doubled between years 2004 to 2009. In this respect, I acknowledge the achievement of the officers of the two Tax Departments. Their hard work, efforts at simplification and rationalization of tax rates and procedures, greater use of Information Technology and improved service delivery standards, have contributed substantially to the tax buoyancy.

Over the years, Central Excise collections have grown steadily, and have by and large exceeded the previous year’s collections, barring a few exceptions. Traditionally, revenue collected by the Center, including Central Excise has been used to fund health, education and other social sector schemes. Lately, the Central Excise has also been used as a fiscal tool, to cushion the impact of the Global recession on the Indian Industry. It is reassuring to note that the slew of fiscal stimulus measures taken by the Government, including that of reducing the Central Excise duty has had a positive impact on the Indian Economy and as per the IIP data for December, 2009, it has shown an impressive 16.8% growth over the last year suggesting that we may end the year 2009-10 with a growth rate of over 7.5% and next year growth at over 8%. Indian economy need to grow in double digit to eliminate poverty and illiteracy in the country.  These goals can be achieved with a growth which is inclusive in nature and encompasses all segments of the society.

I am happy to note that CBEC has implemented e-governance modules to bring about a responsive and transparent tax administration.  These initiatives have reduced the interface between the department and the tax payer, and thus brought more transparency.   CBEC has shouldered the responsibility in augmenting the Center’s revenue in Central Excise, Customs and Service Tax in a fair, equitable and transparent manner.  It must also ensure that while the honest tax-payers are treated fairly, the dishonest amongst them are dealt with sternly.  In this context, I must also highlight the role of the enforcement agencies.  I would like to remind you that the economic offenders are getting increasingly more sophisticated using modern technology.  There are increased linkages amongst various economic crimes and the trails of economic offences are not only confined to the Indian boundaries but it also covers many countries.  The economic offences in the cyber space have made geographical boundaries irrelevant for the offenders and the nature of economic offences has assumed global dimension.  Of late, we see that linkages have also developed between economic offences and threats to national security particularly the economic offences which are cross border in nature.  It is therefore essential that you as a Department should gear up to face the new challenges in the area of cross border economic offences which are detrimental to our national security interest.

Goods & Service Tax is the most important reform in indirect tax administration. The First Discussion paper prepared by the Empowered Committee and the Centre’s views are now in public domain. The senior officers of the department have been holding a series of interactions with all the stakeholders including the Trade & Industry in order to refine the design and concept of the proposed GST. Introduction of GST will bring in changes in the current architecture of central excise and service tax. I am sure that the department will demonstrate its willingness to adopt a new philosophy of tax administration, and manage the transition smoothly. This will require re-engineering the business processes and harmonization with the States. There are problems ahead, and it is naive to think of success without hurdles. Ours is a federation and each state has a say about the different aspects of the GST model.

In the past The Department has shown an ability to adopt changes relating to new methods and processes. Trade and Industry has started thinking of aligning their supply chain model to take advantages of proposed GST.  I am sure that senior officers in CBEC will play a lead role in preparing the organizational structure, human resources and technological backbone for the next phase of simplification and modernization that GST represents.  I wish you all the best.”

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