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Scrutiny of Excise Returns (ER-1 & ER-2) - An Analysis
[Submitted by Mr.V.M.V.Subba Rao, Chartered
Accountant]
- All the returns received by the department shall be scrutinized by
checking the correctness of duty assessed.
- The Scrutiny shall be carried in two stages:
- Scrutiny of Return
- Scrutiny of Assessment
- Scrutiny of Return (Preliminary Stage)
- To check whether information contained in ER- I / ER-2 is
complete, prima facie valid and internally consistent.
- To check the arithmetical accuracy of information contained in the
return.
- To check whether the assessment is consistent with the existing
orders on a particular commodity or in respect of the concerned
assessee.
- To verify whether there is any provisional assessment order in
respect of the assessee.
- To Check and compare the trends of payment of duty, product,
clearance, value and utilization of Cenvat.
- Any discrepancies notices at the preliminary stage, the concerned
superintendent shall take action as per Central Excise Rules, 2002.
- Scrutiny of assessment ( Second Stage)
The Following are the parameters on the basis the returns would be
selected for detailed scrutiny:
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Calculate the change in duty paid through PLA over the last return in
percentage terms. Is there a decrease of more than 15% |
Yes/No |
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Calculate the increase in the value of exempted clearances (other than
export) over the last return in percentage terms. Is this increase
more than 15%? |
Yes/No |
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Calculate the change in unit assessable value for each CETSH over the
last return. Is there a decrease of more than 15%? |
Yes/No |
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Calculate the increase in value of clearances to EOUs over the last
return. Is this increase more than 15% ? |
Yes/No |
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Calculate the increase in value of clearances of partially exempted
goods as a proportion of total value clearances, over the last return.
Is this increase more than 15%? |
Yes/No |
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Calculate the increase in the ratio of CENVAT utilisation to total
duty payment over the last return. Is this increase more than 15%? |
Yes/No |
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Calculate the change in Quantity of goods produced in each CETSH over
the last return. Is there a decrease of more than 15% |
Yes/No |
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Calculate the change in Quantity of gods cleared for Home Consumption
for each CETSH over the last return. Is there decrease of more than
15% |
Yes/No |
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Total number of parameters for which the response is 'Yes' |
Yes/No |
- The detailed scrutiny may not exceed 5% of the total returns
received by the department.
- The purpose of detailed scrutiny to ascertain the correct reason for
abnormal trends exhibited by the parameters.
- In suitable cases, the superintendent may be required to call for
documents/records for verification.
- If necessary, the superintendent may an assurance visit to the
assessee's premises. However, such visit should be made very sparingly
and with due observance of instructions already in force.
- If detailed scrutiny does not reveal any satisfactory reasons for
the abnormal trends notices in the return, a reference may be made to
Internal Audit Wing.
- Time period for completion of scrutiny:
- Both the stages should be completed within 3 months of the receipt
of the return.
(Circular No.818/15/2005-CX dt.15/7/05)
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