The Hindu Business Line : April-May excise mop-up grows 0.9% against full-year target of 8%

New Delhi, June 17 After having suffered a decline in collections in April on a year-on-year basis, the Centre’s excise revenues grew a modest 4.4 per cent in May 2008 to Rs 9,583 crore as compared to Rs 9,175 crore collected in the same month last year.

In the first two months of the current fiscal, on a cumulative basis, the Centre’s excise revenues recorded a meagre 0.9 per cent growth to Rs 15,993 crore (Rs 15,848 crore). The collection performance so far was much lower than the asking rate of about 8 per cent set by the Government for 2008-09.

The Finance Ministry is yet to come to grips with the sluggish growth in excise collections in the recent years, despite the robust industrial growth performance, especially in the manufacturing sector. There has, however, been some moderation in industrial growth in 2007-08 and also in the first month of current fiscal. There are also issues like area-based excise duty exemption and industry’s increased Cenvat credit utilisation to grapple with.

Industry observers reckon that pressure on excise collections may arise from certain recent Central Government actions. After the Budget 2008-09 move to cut the Cenvat rate from 16 per cent to 14 per cent, there have been several rounds of duty cuts to fight inflation and more recently duty changes were undertaken in the oil sector.

The Finance Minister, Mr P. Chidambaram, is convinced that there are revenue leakages on the excise front due to clandestine removal of goods and misuse of Cenvat credit. He had recently asked the Central Board of Excise and Customs (CBEC) to revisit the existing deterrent measures, stating that they were “not deterrent enough”.

Besides making a case for more rigorous set of deterrent measures, he had also suggested that the department could plug excise revenue leakage by obtaining third party information that could be matched against the information on indirect taxes submitted by assessees.

The CBEC is yet to kick off the process of putting in place a more rigorous set of deterrent measures. On the meagre excise collections growth, official sources said that the collections in the first two months are generally not very strong due to several reasons, including the practice of using the unutilised Cenvat credit of previous months.

Meanwhile, the Centre’s customs duty collections continue to be buoyant, registering a 25.1 per cent increase during April-May 2008 at Rs 19,223 crore (Rs 15,369 crore). In May 2008, the Centre’s customs duty revenues stood at Rs 10,205 crore (Rs 8,148 crore).