Stung by the prospects of a Rs 7,000 crore (Rs 70 billion) shortfall in excise collections this fiscal year, the finance ministry is working on a three-pronged strategy that includes stepping up scrutiny and audit of companies in sectors showing a fall in revenue collections.

Besides, Finance Minister P Chidambaram has asked his advisor Parthasarathi Shome, to undertake a sectoral analysis and identify the reasons for the shortfall.

The move follows a review of the tax collection figures by Chidambaram. Finance ministry officials said that as per the present revenue trends, while service tax and Customs duty collections were expected to exceed the Budget targets, direct tax collections were also on course.

The sectors that have shown a dip in excise collections in the first half of the fiscal include two-wheelers, iron and steel, petroleum products and chewing tobacco.

Besides, migration of manufacturing units to special category states to get tax breaks and higher Cenvat availment are also expected to dent the Centre's excise mop-up.

The government collected Rs 52,685 crore (Rs 526.85 billion) as excise duty during April-October, which was around Rs 4,500 crore (Rs 45 billion) less than the target.

The government had budgeted Rs 1,09,199 crore (Rs 1,091.99 billion) as excise collection during the current fiscal year, 18.2 per cent higher than the revised estimate of Rs 92,379 crore (Rs 923.79 billion) for 2003-04.

A shortfall of Rs 7,000 crore would mean that the Centre's excise collections during the year would increase by 10.6 per cent over the revised estimates for 2003-04.

Finance ministry officials said the Central Board of Excise and Customs officials had been asked to monitor companies in order to check under-invoicing.

They have also been advised to look at inputs like electricity consumption and manpower employed in manufacturing units to ensure that the requisite duties are paid.