Total revenue foregone stood at Rs 1.84 lakh crore in FY 2014-15 on account of exemptions in excise duty, and this was the first time in five years that the amount forgone was less than the central excise tax figure at Rs 1,89,038 crore, a CAG report tabled in Parliament said today.
"It is observed that the revenue forgone for 2014-15 in respect of excise of duties was Rs 1,84,764 crore, which is 97.74 per cent of revenue from central excise.
"It is the first time in five years that revenue forgone is less than the total tax revenue," the Comptroller and Auditor General of India (CAG) said in its report on 'Indirect taxes-Central Excise' tabled in Parliament.
In 2013-14, the revenue forgone was at Rs 1.96 lakh crore (115.80 per cent of the central excise receipts); Rs 2.09 lakh crore (119.39 per cent) in 2012-13; Rs 1.95 lakh crore (134.98 per cent) in 2011-12 and Rs 1.92 lakh crore (139.60 per cent) in 2010-11.
CAG said a sizable amount of Rs 81,538 crore of the central excise revenue is blocked in appeals.
"The amount is increasing every year. Despite, a number of measures initiated by the Board, locking up of such a large revenue is a matter of concern," the report said.
During 2014-15, the central excise revenue has shown 11.56 per cent growth compared with a year ago, it added.
The report said that during 2014-15, increase in central excise duty on petrol and high speed diesel resulted not only in increase of central excise collection from petroleum sector but also lead to overall growth of central excise.
"Except petroleum products and plastic, revenue growth in other sectors is either stagnant or negative," the report said.
However, the report found that only less than 50 per cent of the assesses registered as Small Scale Industry (SSI) units in the selected ranges were actually availing the benefit of the SSI exemption.
SSI manufacturer of intermediate goods is not benefited, the CAG report said.
"In 11 cases, excess availing of SSI exemption amounting to Rs 1.83 crore was noticed. Rural SSI units are also at disadvantageous position in comparison to urban SSI units due to lacuna in SSI notification."
The audit also observed 26 cases of irregular availing and utilisation of cenvat credit, non/short payment of central excise duty involving revenue of Rs98.79 crore.
On the effectiveness of internal control, CAG said it observed 34 instances of deficiencies in internal audit carried out by departmental officials and other issues involving revenue of Rs 32.76 crore.
Besides, it said tax accounting and reconciliation is not being followed and monitored by field formations.
The process also needs revision due to change in mode of duty payment and electronic exchange of data. Existing manual/instructions to be followed by the field formation also need to be revised.