Fearing large-scale excise duty evasion by pan masala and chewing tobacco units, the finance ministry has issued strict warning to the sector and told them to give details of the packing machines at their units.

Pan masala, gutkha and chewing tobacco units will face strict action if found evading duty, the ministry said.

The revenue department has asked all the existing units to submit details of packing machines being used for filling and packing of pouches or containers.

The units used to scale down number of machines that were in use and thereby reduce the excise liability.

The annual excise duty revenue from pan masala, gutkha and chewing tobacco units stood at about Rs 600 crore.

Besides the make and model of the machines, the units would also be required to give details of the total number of machines installed in the factory and the average number of pouches/containers produced by each machine per hour and quantity in unit pouch/container.

The department has also asked the units to remove the non-working packing machines from the manufacturing premises. If such machines cannot be removed, then they would be sealed by the excise department officials in such a manner that they cannot be operated.

The finance ministry has also asked the units engaged in the manufacture of gutkha, pan masala and chewing tobacco to maintain records of receipt, consumption and stock of main inputs such as beetle unit, tobacco and packing material. These records would have to be maintained and kept in the manufacturing premises only and made available for verification by the officers of the department.

In July 2007, the Centre's excise revenues stood at Rs 9,388 crore, which represented 2.1 per cent increase to the collection level of Rs 9,193 crore recorded in the corresponding month last year.

Faced with a meagre 2.1 per cent growth in excise duty collections in July this year, the Central Board of Excise and Customs had recently set up an internal working group to study the pattern of excise revenues and analyse as to why excise revenue performance has been slipping in recent months.

The 2.1 per cent annual growth in July was the lowest so far, this fiscal and came in the backdrop of 11.7 per cent manufacturing sector growth recorded in the first quarter of the current fiscal.