Click to Print
Click to Close

Transfers in CBEC - CAG finds fault with


The CAG in his Report No. 13/2007 to Parliament was not exactly happy with the way transfer policy was implemented in the CBEC.

The CAG observed,

A significant contributor to the effectiveness of the administrative machinery is a human resource development policy that offers opportunities for excellence and career advancement through a proper placement strategy.

In order to increase transparency and to provide better opportunities to officers and a more planned approach to cadre planning, a transfer/placement policy of Group ‘A’ officers was formulated as a part of reforms in tax administration which came into effect from the 1st April 2005.

A test check of the disposition list as on May 2006 of officers of Indian Revenue Services (Customs and Central Excise) revealed that:-

a) Paragraph 5.3 of the policy stipulates that the continuous stay of a Group ‘A’ officer should not exceed 6 years in a class ‘A’ station and four years in a class ‘B’ station. It was, however, noticed that 75 officers were yet to move out from a class ‘A’ station after 7 to 15 years and 4 officers remained in class ‘B’ station for 8 to 10 years.

b) Paragraph 6.1 and 6.2 of the policy classify all posts in the CBEC as sensitive and non-sensitive posts and the tenure of an officer in a sensitive post is ordinarily restricted to 2 to 3 years. Test check, however, revealed that 7 officers were holding sensitive posts for 7 to 9 years.

c) Paragraph 7.2 restricts the tenure of officers in the Directorates of Revenue Intelligence, Central Excise Intelligence and Vigilance for 3 years along with the condition that no officer shall spend more than 6 years in these Directorates during their entire service career. 5 officers of the CBEC were posted in these Directorates for 7 to 10 years.

There is more to transfers than mere policies.

The CAG has recommended that CBEC needs to implement the laid down policy regarding transfer of its officers.

CBDT is no better

The CAG found the CBDT no better.

Inadequate database at CBDT

The CAG observed,

The CBDT is the Cadre Controlling Authority of Indian Revenue Service (IT) officers. The Board had formulated transfer/placement policy in 2005 categorising all stations into three classes and prescribing tenure of officers in different classes of station. The posts have also been categorized as sensitive and non-sensitive. The tenure of an officer in a sensitive post is to be restricted to two years at one stretch. Paragraph 2.6 of the transfer/placement policy stipulates that a correct and complete database is a sine qua non for operationalisation of the policy. The Board has to ensure that a database containing the profiles of all Group ‘A’ officers is created and regularly updated.

The disposition list of officers of the rank of Commissioner of Income Tax prepared by CBDT indicated the stations of their posting. The list, however, did not contain the date from which they were posted at a particular station. The database of other Group ‘A’ officers was not maintained by the Board. It was stated that this was being maintained by the field offices located all over the country. In the absence of correct, complete and up to date central database in CBDT, the implementation of transfer/placement policy in respect of restricted stay of officers at class ‘A’ station, their tenure in sensitive posts, etc. could not have been monitored by the department nor could this aspect be examined by audit. Thus, the main objective of the policy to bring about transparency in postings and restricting tenure on sensitive posts/stations was not achieved.

The Department stated (March 2007) that instructions had been issued to all CCITs (CCAs) to ensure that officers do not get posted to sensitive posts or stations in excess of the prescribed tenure. In the absence of central control by CBDT, it is not clear how the policy will be enforced even in future.

The CAG recommended that The Ministry should urgently complete and update the central database so that the transfer/placement policy can be implemented properly and overstayal in sensitive posts avoided.

Secret Service Fund – How is it spent?

The Revenue Departments are given a lot of un-accountable money called Secret Service Funds – the DRI, DGCEI, IT, all Commissionerates have these funds, which is meant to be used for gathering intelligence. You know how the money is used. Here are a few samples

++ Money spent on visits of senior officers, which cannot be accounted for.

++ Dinners and tea (includes alcohol) parties when officers hold meetings

++ Unauthorized travel

++ Unauthorized travel by air of officers who are not entitled to it.

++ Any expense not officially allowed.

++ Miscellaneous expenditure that will not stand the scrutiny of Audit.

Most of the officers who spend this money illegally are honest and sincere and will be appalled at the idea of being corrupt or misusing government funds, but they have no qualms about misusing the Secret Funds. Since these funds are not auditable, they have a feeling that they can use it as they want. It has come to the notice of DDT recently of an instance of a very honest officer of paying for the air ticket of another honest officer out of the Secret funds. Both of them had no feelings of guilt!

But the CAG is not exactly amused!

The CAG’s report to Parliament stated,

Secret Services: Inadequate monitoring

An expenditure of Rs. 15 crore (Revenue Department; Rs. 1.62 crore; Direct Taxes; Rs. 4.52 crore; Indirect taxes; Rs. 8.87 crore) was incurred during the years 2003-06 on ‘secret services’. The expenditure on secret services is to be monitored by the respective Head of the Office through reports submitted by the officer designated for incurring expenditure on secret services. Test check revealed that expenditure had not been monitored and utilisation certificate of secret service expenditure was not sent either to the office of the Accountant General or to the respective Pay and Account Offices as required under the Ministry of Finance, Department of Expenditure, standing orders. The department and the two Boards did not thus exercise any control over the expenditure on secret services.

The Department stated (March 2007) that necessary instructions had been issued to all budgetary authorities under the Department of Revenue, CBEC and CBDT.

The CAG recommended that Strong monitoring mechanism is needed for ensuring control over the functioning of attached/field/subordinate offices.

Jairam Ramesh praises Customs Commissioner

Jairam Ramesh, Minister of State for Commerce, launched a new initiative of the Spices Board in the Karbi Anglong district of Assam, one of the most backward regions of the state populated by the indigenous people belonging to the Karbi Tribe. This initiative intends to start the organic cultivation of turmeric (haldi), ginger (adrak) and chilli (mirchi) in the district on a large-scale and to promote its processing and export as well.

Two companies have been set up as producers’ companies under the Companies Act, 1956 --Coinonya Farms Producers Company Limited for turmeric and Karbi Farms Producer Company Limited for ginger and chilli. Producers’ Companies is a new provision in the Companies Act which give primary producers the flexibility to organize themselves as a normal company but on the basis of a one man-one vote principle which is the essence of a cooperative institution. Producers’ Company combines the economic advantage of a corporate entity with the social benefits of a cooperative.

The two companies are located in Paroli and Rongmanpi in the Hamren sub-division of Karbi Anglong district. Each company has a full-time chairman and managing director. The Spices Board owns 49% of each company and its equity stake is Rs 1 crore in each company. Local tribal farmers, mostly small and marginal, traditionally practicing jhum cultivation own 51% in each company. Land owned by these farmers have been transferred to these two companies as their contribution to equity. 600 farmers own 51% of Coinonya Farms Producer Company Limited and 400 farmers own 51% of Karbi Farms Producer Company Limited.

Each company will initially have a plantation area of 500 hectares which will be cultivated over a five year period, with 175 hectares being taken up in the first year itself. MOUs are being signed with private companies for processing and marketing. The first such MOU has already been signed by Coinonya Farms with Arjuna Natural Extracts for extraction and marketing of turmeric products.

Jairam Ramesh congratulated Donald Ingty, Commissioner of Customs, Kochi who spearheaded this project for the benefit of the community to which he belongs and who sought out the support of the Spices Board in this venture.

Financial Inclusion – The Indian Experience

One common measure of FI is the percentage of adult population having bank accounts. Going by the available data on the number of savings bank accounts and assuming that one person has only one account, (which assumption may not be correct as many persons could have more than one bank account) we find that on an all India basis 59 per cent of adult population in the country have bank accounts – in other words 41 per cent of the population is unbanked. In rural areas the coverage is 39 per cent against 60 per cent in urban areas. The unbanked population is higher in the North Eastern and Eastern regions.

Who are the excluded?

The financially excluded sections largely comprise marginal farmers, landless labourers, oral lessees, self employed and unorganised sector enterprises, urban slum dwellers, migrants, ethnic minorities and socially excluded groups, senior citizens and women. While there are pockets of large excluded population in all parts of the country, the North East, Eastern and Central regions contain most of the financially excluded population.

Reasons for financial exclusion

In remote, hilly and sparsely populated areas with poor infrastructure, physical access itself acts as a deterrent. From the demand side, lack of awareness, low incomes/assets, social exclusion, illiteracy act as barriers. From the supply side, distance from branch, branch timings, cumbersome documentation and procedures, unsuitable products, language, staff attitudes are common reasons for exclusion. All these result in higher transaction cost apart from procedural hassles. On the other hand, the ease of availability of informal credit sources makes these popular even if costlier. The requirements of independent documentary proof of identity and address can be a very important barrier in having a bank account especially for migrants and slum dwellers.

Recent initiatives by Reserve Bank of India

Reserve Bank has undertaken a number of measures with the objective of attracting the financially excluded population into the structured financial system. In November 2005, banks were advised to make available a basic banking ‘no-frills’ account with low or nil minimum balances as well as charges to expand the outreach of such accounts to vast sections of the population. Banks are required to make available all printed material used by retail customers in the concerned regional language.

In order to ensure that persons belonging to low income group, both in urban and rural areas do not encounter difficulties in opening bank accounts, the know your customer (KYC) procedures for opening accounts has been simplified for those persons with balances not exceeding Rs 50000/- and credits in the accounts not exceeding Rs.100000/- in a year. The simplified procedure allows introduction by a customer on whom full KYC drill has been followed.

Banks have been asked to consider introduction of a General purpose Credit Card (GCC) facility up to Rs. 25000/- at their rural and semi urban braches. The credit facility is in the nature of revolving credit entitling the holder to withdraw upto the limit sanctioned. Based on assessment of household cash flows, the limits are sanctioned without insistence on security or purpose. Interest rate on the facility is completely deregulated.

A simplified mechanism for one-time settlement of overdue loans up to Rs.25,000/- has been suggested for adoption. Banks have been specifically advised that borrowers with loans settled under the one time settlement scheme will be eligible to re-access the formal financial system for fresh credit.

In January 2006, banks were permitted to utilise the services of non-governmental organisations (NGOs/SHGs), micro-finance institutions and other civil society organisations as intermediaries in providing financial and banking services through the use of business facilitator and business correspondent (BC) models. The BC model allows banks to do ‘cash in - cash out’ transactions at the location of the BC and allows branchless banking.

Other measures include setting up pilots for credit counselling and financial education. A multilingual website in 13 Indian languages on all matters concerning banking and the common person has been launched by the Reserve Bank on 18 June 2007.

Huge increase in no frills accounts

The outcome of the efforts made is reflected in the increase of 6 million new ‘no frills’ bank accounts opened between March 2006 and 2007. In view of their vast branch network (45000 rural and semi urban branches) public sector banks and the regional rural banks have been able to scale up their efforts by merely leveraging on the existing capacity. FI is being viewed by these banks as a huge business opportunity in an overall environment that facilitates enterprise and growth. It provides them a competitive advantage and defines a clear niche for their growth.

From the speech by Smt. Usha Thorat, Deputy Governor, Reserve Bank of India at the HMT-DFID Financial Inclusion Conference 2007, Whitehall Place, London, UK on June 19, 2007.

From our Legal Corner – tomorrow’s cases


Income Tax

Tax paid on self-assessment basis : Interest on refund cannot be denied : Madras HC


Evidence Act - photocopies cannot be received as secondary evidence - Secondary evidence, as general rule is admissible only in absence of primary evidence - If original itself is found to be inadmissible, same party is not entitled to introduce secondary evidence of its content : SC

Central Excise

AC sits in judgement over Tribunal's orders - Order set aside - Refund ordered with interest - AC's contumacious Order - Had SDR not pleaded for mercy on his behalf, we would have recommended stringent action against the officer : Tribunal

Obeying CESTAT orders is not a favourite trait in the field. Even after appearing before the Tribunal and admitting his mistake, an AC flouted the orders of the Tribunal and it was left to the DR to beg for mercy on the errant AC

See our columns tomorrow for the judgements

Until Tomorrow with more DDT

Have a nice day.

Mail your comments to


Click to Print
Click to Close