The Hindu : Karnataka / Bangalore News : Tax evasion by trailer-makers

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Friday, Mar 21, 2008
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Karnataka

Karnataka - Bangalore

Tax evasion by trailer-makers

Staff Reporter

Cases booked against 17 manufacturers

Duty evasion of Rs. 50 crore detected
Raids conducted by Central Excise in several cities

BANGALORE: In one of the biggest evasions of Central Excise by the manufacturers of trailers that transport automobiles, the Directorate General of Central Excise Intelligence (Bangalore Zone) has detected duty evasion of Rs. 50 crore and has booked cases against 17 manufacturers across the country.

The detection is expected to increase annual excise duty collection anywhere between Rs. 50 crore and Rs. 100 crore from this segment.

The raids were conducted by the Central Excise Intelligence officials during the last week in places including Bangalore, Gurgaon, Delhi, Goa, Chennai and Hyderabad, which are major regions that manufacture such transport vehicles.

According to Additional Director General Bangalore Zone Somesh Arora, these trailers and manufacturers were evading Central Excise duty by suppressing the figures and also by fragmenting the total value of the trailers to remain within the Central Excise exemption limits.

Mr. Arora said the detection followed information that more than 6,000 such trailers were manufactured and cleared by various manufacturers all over India, and after ascertaining that there is an estimated demand for about 2,000 trailers each year. The detection of this large-scale evasion was made possible largely through the efforts of Deputy Director T.V. Ravi and Senior Intelligence Officer S. Shyamsundar, a release said.

Modus operandi

Explaining the modus operandi of these manufacturers, Central Excise spokesperson M.N. Thyagraj said the manufacturers were only showing the cost of fabrication, whereas the owner of the vehicle would supply some of the costly yet crucial parts, including valves, bearings and hydraulics through his inventory.

Wrong calculation

Through this, the manufacturers, who are mostly small-scale industries, would remain within the annual turnover of Rs. 1.5 crore, the duty exemption limit for SSIs. Whereas, the new product should also involve the cost of supply for calculation of the duty at the rate of 16 per cent, and that the entire value of the product is to be calculated for the duty, he added.

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