The Hindu Business Line : Excise duty evasion: Deterrent measures from Jan 1

Faced with a somewhat modest growth in excise duty collections despite strong manufacturing sector performance, the Finance Ministry is now looking to plug revenue leakages and act tough on tax evaders in this sector.

It now proposes to lay down certain measures to be initiated immediately after detection of cases of deliberate non-compliance that cause substantial loss of excise revenue. These measures are to be brought into force from January 1 next year.

"We are not looking at any amendment in law. It is possible that central excise rules may have to be amended for this. We will consult the Law Ministry on this. Our effort is to strike a balance between facilitation and enforcement," a Central Board of Excise and Customs (CBEC) spokesperson told Business Line.

The Finance Ministry is of the view that the progressively simplified tax procedures on excise duty have not resulted in expected rise in the level of compliance.

Swift action

The proposed measures, which are deterrent in nature, would lead to swift action in cases of planned and deliberate excise duty evasion. The nature of restriction that could be imposed include withdrawal of the facility of monthly payment of duties for a specified period and non-utilisation of Cenvat credit for a specified period. The decision to impose restriction will be taken at the level of the CBEC Member (Excise).

The move to put in place the proposed deterrent measures comes at a time when the strong manufacturing sector performance is not getting translated into increased excise duty collections.

The Finance Ministry's view is that there is large-scale evasion of excise duty in manufacturing sector. Moreover, the growth in Cenvat credit utilisation is "little more" than the credit that may be due to the industry.

The offences that could be considered for the purpose of action under the proposed measures are removal of goods without documents and without payment of duty, taking of Cenvat credit on invoices that are not genuine, claiming of refund or rebate based on invoices that are not genuine (for manufacture exporter and merchant exporter) and issue of excise invoice without delivery of goods (by dealers and manufacturers).

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