Economy Slowdown Takes Toll Of Excise, Customs Collections

Indirect tax collections were below internal targets at the end of October, but senior finance ministry officials were confident that the buoyancy in the last quarter of the fiscal year would help them achieve the annual targets for 1997-98.

Excise collections in 1997-98 till the end of October stood at Rs 24,432 crore as compared to Rs 23,601 crore mopped up during the same period in 1996-97 while customs collections stood at Rs 22,480 crore (Rs 23,302 crore). The rate of growth, as compared to April-October of 1996-97, worked out to a rise of 3.5 per cent for excise and a decline by the same margin for customs.

At this level, excise collections are 12.5 per cent below the internal target (of Rs 27,918 crore) set for April-October 1997-98 and performance of customs was worse of at 19.4 per cent below the target (of Rs 27,898 crore).

Service tax collections at the end of August (till which period data is available) was Rs 700 crore as compared to the annual target of Rs 1,250 crore. This is expected to be bolstered by the extension of the service tax to the transport sector from November 19. While the full year target under this segment was fixed at Rs 900 crore, the collections would aggregate about Rs 540 crore.

According to officials, the outlook at the end of October reflected an improvement over what prevailed at the end of the first six months of the current fiscal year.

At the end of September, the rate of growth for customs was actually negative at the end of September and around 3 per cent for excise (as compared to the target of 19 per cent for customs and 13 per cent for excise). While slowdown in economic growth has taken its toll of excise collections, the dismal performance under imports has affected customs.

An internal meeting in finance ministry, called early last month, had concluded that there all was not lost and that there might be a recovery in the last quarter of the year and the targets would eventually met.

The measures short listed by the revenue department to bolster indirect tax receipts, especially customs, include:

Auctioning goods confiscated by customs;

Stepping up tax evasion and fraud investigation measures;

Mopping up of tax arrears;

Recovery of revenue receipts locked up in adjudication; and

Identifying and bringing in new areas under the tax dragnet.

To step up revenue receipts from adjudication cases, a target of 20 cases a month has been set for excise and customs commissioners.

According to revenue department sources the averages till now were about two cases a month.

Simultaneously, in order to ensure a more equitable workload, the threshold for hearing adjudication cases has been raised for deputy commissioners and additional commissioners to Rs 10 lakh and Rs 20 lakh, respectively.