ATHIRD party information system to prevent excise evasion –– on the lines of the reporting system put in place to track income tax evasion –– could take shape soon to rein in those cheating on this indirect tax. The excise department is exploring the possibility of using power consumption of manufacturing units to check underreporting of production. Usually, most manufacturers show lower production to evade payment of excise duty. With details of power consumption in hand, the department would be in a position to match it with the quantum of production and check if there is under-reporting, a government source told ET. This could work on the similar lines as the third party information network in the form of annual information returns (AIR) which is seen as critical input for the income tax department. Data from AIR has proved very useful in income tax department enabling it to prepare 360 degree profiles of assessees. The proposal to track excise evasion on the basis of power consumption was discussed at the chief commissioners conference of excise and customs last week. The final modalities for implementing this strategy are being worked out now. The department has already firmed up a proposal to exchange data with state value added tax (VAT) departments. There is a huge concern about evasion in excise with the collections growing by just about 6.8% in comparison to other indirect taxes where the growth is in double digits. There are issues of compliance in small scale industries sector where the exemption limit was raised to Rs 1.5 crore this budget. These units are exempted from filing of declarations also as long as there annual clearances are below Rs 90 lakh –– Rs 60 lakh less than the full exemption limit of Rs 1.5 crore. A comparison of power consumption statistics with the production figure will help the excise department in tracking if there is deliberate under-reporting to keep clearances below Rs 90 lakh to avoid filing of declaration itself. Besides, the SSI sector, the department would also keep a close watch on the manufacturers of evasion prone sectors which appear the list of 20 commodity group showing adverse credit to cash ratio. The data thrown up in the audits would also be tallied with other data to detect evasion.