Sugar mills have come under the government scanner for alleged excise duty evasion. The Cabinet committee on prices (CCP) has asked the Central Board of Excise & Customs (CBEC) to direct its field formations to keep a watch on sugar mills. This follows allegations that delayed release of sugar in the market by mills was resulting in excise loss of Rs 500 crore, besides not meeting demand in the domestic market.

Sugar commissioners have also been asked to monitor timely release of sugar in the domestic market. Since the move also involves ensuring availability of the sensitive commodity in the domestic market, apart from ensuring excise collections are not affected, the two departments have been asked to work in tandem. Excise officials and sugar commissioners have to coordinate and ensure timely release of sugar quota, government sources said.

The CCP direction follows reports of certain sugar mills deliberately withholding sale of buffer stock into the open market or exporting it without prior approval of the government. Excise field formations will monitor the release of levy sugar, the sources said.

Sugar that has not been sold in the domestic open market from the buffer stock will be converted to levy, according to the order issued by the ministry of consumer affairs. With the conversion to levy, the excise duty loss could be as much as 50% of the value recovered if it was sold in the open market. The approximate quantity estimated to be lapsed to levy sugar is 10 lakh tonnes, which puts excise duty loss to Rs 500 crore.