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Govt to tighten noose on excise evaders
Posted Date: 10 Jul 2008 Resource Type: Articles/Knowledge Sharing Category: News
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Posted By: banwarilal Member Level: Gold
Rating:  Points: 2
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NEW DELHI: Concerned over lower than budgeted growth in excise duty collections despite booming industrial activity, FM P Chidambaram on Tuesday said the government would leverage VAT statistics and draw a relative comparison with the declaration made by industries with regard to their excise obligation.
"Trend in VAT must mirror trend in excise," the FM told reporters after a meeting with chief commissioners and directors general of central excise and customs. In addition, the Central Board of Excise & Customs will undertake "high impact audit" of firms producing steel, chewing tobacco and furnace oil to check possible instances of evasion.
Government's action stems from fears that firms were evading excise duty since collections during the Q1 had increased by 6.8% while VAT mop-up rose nearly 25% when industrial output grew at double-digit rates. High level of exemptions, in addition to evasion, was seen as the other reason for low growth.
CBEC chairman SK Singhal said the department had found a large number of units producing steel, furnace oil and gutka indulging in excise duty evasion.
The Directorate General of Central Excise Intelligence had unearthed duty evasion of over Rs 2,300 crore during last fiscal year and almost same amount in its previous year.
A majority of the offenders were from chewing tobacco, iron and steel, plywood and plastics and chemicals sector apart from cases of Cenvat and area-based scheme misuse.
There were also suspicions of misuse of Cenvat with officials fearing that the tax credit taken for payments made in the previous stage was higher than tax deposited through personal ledger account as cash.
Chidambaram was, however, confident of meeting the budget targets on indirect tax collections. His confidence stems from a 31.6% rise in service tax collections which rose to Rs 7,257 crore during April-June 2007.
Customs duty collections also registered a 20% rise to touch Rs 23,570 crore in Q1 this year, as against Rs 19,677 crore during same period last year.
"We are slightly behind on excise, a shade behind on service tax, but we have no grave concerns in terms of budgetary targets... Now, I am confident that with the economy growing at close to 9%, the department will be able to meet the budget estimates," he said.
Revenue secretary PV Bhide has held a meeting with VAT and excise officials in Andhra Pradesh to put in place a system of exchange of information. "It has been attempted in AP and once it is functional, we will like to replicate it in other parts of the country," the FM said.
While making it clear that the total VAT collection by a state could not be the yardstick to measure the exact excise duty to be levied, he said it could be used for making comparison in most sectors.
FM said making of e-filing of duty mandatory for assesses with duty liability of over Rs 50 lakh will also improve the collection as already 89% of excise collections are coming through e-payment.
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