Lower excise collection stirs revenue officials

Excise collections rises 5.6% in April-July, against the projected 20.6%

The lower-than-projected growth in excise collections has prompted the revenue department to monitor the mop-up from the petroleum, iron and steel, cement, automobiles, tobacco products and chemicals sectors.

The indirect tax collection from petroleum products, for instance, increased by 9 per cent during the first quarter, against the projected 15 per cent for the year. A 15 per cent growth is expected to translate into an indirect tax collection of around Rs 65,000 crore during 2005-06 from the sector.

As per the petroleum ministry's data, diesel consumption fell 9 per cent in the first quarter, while petrol consumption remained almost static.

"The economy was doing well but for some reason the tax data did not reflect the trend. Hence, we thought the industries will be using more fuel with increased economic activity," an official told Business Standard.

During April-July, excise collections rose 5.6 per cent to 8,590 crore, though it was budgeted to grow 20.66 per cent to Rs 1,21,533 crore during the current fiscal. Higher utilisation of Cenvat credit during the first two months had pulled down collections.

Apart from studying the growth and the tax collections in the identified commodities, the revenue department intends to tighten the excise audit of companies through more careful financial analysis of production trends. The department was considering roping in financial analysts, cost accountants and chartered accountants for a more thorough analysis.

A separate study had also been initiated to examine the loss of excise duty on account of area-based exemptions for hilly or backward areas.

Officials said as part of a long-term strategy to improve excise audit, the department was considering adopting input-output norms similar to those adopted by the Directorate General of Foreign Trade, for sensitive products like iron and steel, ghutka and plastics.

Measures to augment excise collections would be a priority item during the Finance Minister P Chidambaram's interaction with the chief commissioners of customs and excise next week. Officials said the meeting would also discuss arrear collection targets, the proposed Large taxpayer units, the help centres, measures for computerisation and business process re-engineering.

Excise deal

The revenue department intends to tighten the excise audit of companies through more careful financial analysis of production trends

The department is planning to adopt input-output norms similar to those adopted by the Directorate-General of Foreign Trade for sensitive products like iron and steel, ghutka and plastics

Measures to augment excise collections to be a priority item during Finance Minister P Chidambaram's interaction with the chief commissioners of customs and excise next week