INDIA BUSINESS WORLD - OCTOBER 2006
THE MONTH THAT WAS...

EXCISE SLEUTHS SPOT RS 1,000-CR EVASION

 Companies including LG Electronics, Skoda Auto India and Sahara India Financial Corporation have been booked by the directorate of central excise intelligence (DGCEI) for tax evasion. In a crackdown on tax evaders in the first half of this fiscal, DGCEI has detected evasion of Rs 1,042.07 crore and booked 442 cases.

   In the case of Sahara India Financial Corporation, DGCEI has detected service tax evasion of Rs 37 crore, spokesperson for the Central Board of Excise and Customs, Hemambika Priya, said. Sahara India Financial Corporation apparently paid incentives to Sahara India for collecting deposits on their behalf. The incentive is taxable under business auxiliary services. DGCEI found LG Electronics was not paying duty against the Cenvat credit on its imported inputs. “The assessee was not paying duty equal to the credit availed by them on imported inputs cleared to domestic market,” the spokesperson said.

   She added that the company has accepted the duty evasion of Rs 5.32 crore and paid up. DGCEI was further investigating the matter, she said. Skoda Auto India had not included technology transfer agreement charges in the assessable value of imported goods. The Customs duty evasion in this case amounts to Rs 25 crore, out of which the company has paid up Rs 8 crore.

   The excise department is also tightening the noose on evasion and is keeping a close watch on sectors including iron and steel, tobacco products, plywood and aluminium. Even the areabased excise exemptions are being looked into to keep a track of any possible evasion, she said.

   Under area-based exemptions, there was an apprehension that these were being misused. Many companies have set up units in excise-exempted states, where only ‘namesake' manufacturing was being carried on to avail of the tax benefits. Even as the department tightens its vigil on evasion, its taxpayerfriendly measures such as large taxpayer unit are slowly picking up. The number of corporates joining the first unit in Bangalore has gone up to 167 from 37. The companies which have signed up include MTR Foods, Bharat Electronics, State Bank of Mysore and HMT.

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