The finance ministry has decided to take stringent measures against pan masala and gutka (chewing tobacco) units indulging in clandestine excise duty evasion estimated at about Rs 1,800 crore (Rs 18 billion) annually across the country.

The excise department has made it mandatory now onwards for all the pan masala and gutka manufacturing units to submit a summary report every month, relating to the supply of raw material and sales in the market.

"This measure is expected to help us keep a tab on these small and medium units, which sell small pouches at the village level," said a senior official in the Central Board of Customs and Excise adding some additional steps could be in the offing to check duty evasion.

"On the basis of our intelligence reports and field investigations, we have found pan masala and gutka units among the top excise duty evaders.In fact, only one-fourth of duty is being collected from this industry, estimated at Rs 600 crore (Rs 6 billion) annually against the potential of Rs 2400 crore (Rs 24 billion) revenue," the official said.

In the Budget 2007-08, Finance Minister P Chidambaram has announced the withdrawal of duty exemptions to the pan masala units in the North East, besides revising the excise duty on all pan masala products with tobacco to 66 per cent, while marginally reducing duty to 45 per cent for non-tobacco products.

The Directorate General of Central Excise and Intelligence booked 12 cases involving duty evasion of Rs 3.82 crore (Rs 38.2 million) against pan masala and gutka units by January this fiscal, as against 15 cases involving duty evasion of Rs 143.48 crore (Rs 1.43 billion) last fiscal.