The Hindu Business Line : Chidambaram keen on high impact excise audits

Curbing evasion
“Excise collection trend should normally mirror the growth trend in VAT. If excise in a product or industry is not mirroring the growth of VAT in that product or industry, then there is a problem that needs to be addressed.”

Kamal Narang

New audit call: The Finance Minister, Mr P. Chidambaram, at a meeting with Chief Commissioners and Directors General of Central Excise and Customs in New Delhi on Tuesday. He said the Government has decided to do a ’high-impact auditing’ to check excise evasion.—

Our Bureau

New Delhi, July 24 Concerned over the high degree of excise duty evasion in certain sectors, the Finance Minister, Mr P. Chidambaram, wants to strengthen the audit of excise accounts. He has also asked the State Governments to share information on state-level value added tax (VAT) collections with the excise department to help identify cases of excise duty evasion.

“If there is one tax where I think there is high degree of evasion, it is excise duty. We are trying to strengthen the audit of excise accounts. We want to do high impact audits. The audit must yield larger revenues. It must be aimed at sectors, products or assessees who are known to be prone to tax evasion,” Mr Chidambaram told reporters after addressing a conference of chief commissioners and directors general of excise and customs here today.

On the issue of sharing of information on VAT collections by the States with the Centre, the Finance Minister pointed out that, as a rule, the trend in VAT collections must be more or less reflected in the trend in excise collections.

“If there is an upswing in the VAT collections of a product manufactured and sold, likewise there must be an upswing in excise collections from that product. Excise collection trend should normally mirror the growth trend in VAT. If excise in a product or industry is not mirroring the growth of VAT in that product or industry, then there is a problem that needs to be addressed,” he said.

AP exercise

Mr Chidambaram also said that the revenue department at the Centre had already undertaken an information sharing exercise with the Andhra Government officials. “We want to replicate what we did with Andhra Pradesh to other States as well. We have written to Chief Secretaries seeking their cooperation in sharing of information between their VAT departments and the excise department,” he said.

e-payments

The Finance Minister also pointed out that a number of measures had already been taken to curb excise evasion. The Government has made it mandatory for assesses with excise duty obligation of over Rs 50 lakhs to make e-payments only. Mr Chidambaram highlighted that 89 per cent of excise duty collections are made through e-payment mode. “This number will rise and eventually we want everybody except a few to make electronic payments,” he said.

Meanwhile, in a significant change in the pattern of excise duty collections, Mr Chidambaram said in fiscal 2006-07 the payment through Cenvat credit exceeded the cash payment through personnel ledger account (PLA).

“It is difficult to draw any conclusions on this at this moment. It has happened for the first time last year. We will see what happens this year. The positive spin on this is it means that Cenvat chain is completed. The negative spin is there may be misuse of Cenvat credit. We are keeping a close check on cenvat credit to ensure that there is no misuse,” he said.

Meanwhile, official sources said that steel, furnace oil and gukta are certain sectors/industries where excise duty evasion has been witnessed.

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