Businesses beware! To counter rampant excise duty evasion?persistently thwarting taxmen from meeting their collection targets?the investigation wing of the Central Board of Excise & Customs (CBEC) has asked its field officers to arrest evaders, even if they agree to pay their dues, if they find the evasion was deliberate and planned.
The instructions from the Directorate General of Central Excise Investigation (DGCEI) come in the wake of massive excise duty evasion over the last few years. ?This is just a reiteration of official procedure. But if it is followed properly, it will be a good deterrent,? said a senior tax official.
Official procedures already specify the conditions under which a defaulter can be arrested during investigations. These include failure to cooperate, tampering with evidence and trying to escape.
Under the new directive, however, offenders who own up and pay the evaded duty may not find themselves in the clear if the evasion is serious.
?What would constitute a serious offence would depend upon the facts and circumstances of each case,? the DGCEI has stated. While deciding on the gravity of an offence, the investigating officer must keep in mind whether the evasion was deliberate and planned, involved the forging of documents and falsifying records, and whether the offence was sustained over a long period of time.
?Arrest of a person in a case where (the) gravity of the offence is serious would, apart from furthering the cause of investigations, also have the effect of deterring others from committing fraud and help raise the level of compliance,? the DGCEI note underlines.
The CBEC has already taken a number of measures to crack down on excise duty evasion. As reported earlier by FE, it plans to address overall excise evasion rather than specific sectors, as it had done last fiscal. It is planning to impose higher penalties on repeat offenders and conduct more audits to keep a tighter check on manufacturers. The spate of raids, like the ones on pan masala and gutkha manufacturers last year, are also set to continue this year.
Excise duty evasion has been regularly impeding collections. In 2007-8, CBEC met its overall indirect tax target, but excise collections fell short of the Rs 1,27,947 crore target despite a strong performance by the manufacturing sector. Even this target was lower than the original estimates made in the Budget. Similarly, in 2006-07, excise duty collections fell short of target even though the estimate was revised downward.
In 2008-09, excise duties are projected to post a mo-dest growth of 7.75% to Rs 1,37,874 crore. Officials have however attributed the lower growth projection for 2008-09 to the 2% cut in excise duty rate announced in the Budget.