The action follows a report by the Central Economic Intelligence Bureau about rampant tax evasion by these entities and misuse of Cenvat credit scheme and area-based exemptions. The board has now prepared a special action plan to ensure that the field formations go after such entities.
The department is also building a data base of iron, steel and plastic articles based on which dealers and manufacturers will be selected for intensive scrutiny.
Records are being verified to detect dealers passing substantial Cenvat credit. Manufacturing units showing adverse personal ledger account (taxes paid in cash) and Cenvat credit utilisation ratio are also under the scanner. Units doing poor value addition to take advantage of the area-based exemptions are also being looked at.
In case of plastic items, preventive units and audit parties are examining the sales turnover and scrutinising the records of dealers and manufacturers.
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Gutkha and pan masala is also prone to tax evasion. In case of gutkha and pan masala, the department implemented mandatory compounded excise levy scheme from July 1.
Excise duty collections are under pressure due to reduction in the rate from 16 per cent to 14 per cent, evasion, fictious Cenvat credit claims and overall slump in the manufacturing sector in the last few months.
The collections grew a mere 2.8 per cent in the first quarter of 2008-09. Excise duty collection needs to grow at 10 per cent to achieve the Budget estimate of Rs 1,37,874 crore for 2008-09 as against Rs 1,25,000 crore collected in 2007-08.