With excise duty collections continuing to decline, the finance minister P Chidambaram on Thursday said stern action must be taken against evaders of the duty. We are concerned about the sluggish growth in central excise collections, he said on the sidelines of the annual conference of chief commissioners and director generals of CBEC, adding that, In 2008-09, our focus will be on increasing revenue from excise duty.

Pointing out that the reasons for lower collections are clandestine removal of goods and misuse of Cenvat credit, he said there is a need for more stringent deterrent measures to ensure that there is no organised evasion of the tax.

The finance minister, also, asked the excise department to try and replicate the Annual Information Returns (AIR) system of the direct taxes, and prepare a system for third party information. For instance, payments of value added tax by assessees and electricity bills of manufacturers can be used as an indicator of their excise duty liability bills, he said. Vat payments are already being matched against excise duty liabilities in some states, he said, adding that this must be done on an all India basis.

Chidambaram also stressed that field formations need to work out stern preventive measures against evasion-prone industries and also closely monitor manufacturing units. He also asked the CBEC to review deterrent measures and make them stricter. Deterrent action taken on one assessee must have a salutary effect on all assessees in the same production group, he said.

With excise duty collections in April this year declining by 3.9%, the finance minister said that the full-year target of collecting Rs 1,36,610 crore, which is a mere 8.8% rise over last fiscal, seems a little formidable. Chidambaram however refuted any direct correlation between industrial production and excise duty collections.