Indirect Tax

Report No. 33 of 2014 - Performance Audit on Central Excise Administration in Automotive Sector of Union Government, Department of Revenue-Indirect Taxes,Central Excise

Date on which Report Tabled:
Fri 19 Dec, 2014
Date of sending the report to Government
Government Type
Union Department
Indirect Tax
Sector Taxes and Duties


We conducted a performance audit in 40 selected Commissionerates, including examination of records relating to 239 assessees manufacturing automobiles or parts thereof, to seek assurance that the indirect tax administration is adequately placed to safeguard the interests of revenue through its compliance verification mechanisms, annual analyses of tax payers and defaulters, monitoring of exemptions etc. While doing so, we also looked into the adequacy of the Rules and extant instructions in ensuring proper assessment and collection of revenues.

The performance audit revealed certain inadequacies in the extant provisions, system as well as compliance issues relating to the assessment and collection of duty from the Automotive Sector. Thirty-nine out of the selected 40 Commissionerates intimated that they had not undertaken any analysis of revenue collections from the sector. Non-submission/delayed submission of returns prescribed under Central Excise Rules and Cenvat Credit Rules by the assessee of automotive sector. We observed that master files had not been created for 1,116 assessees.

We observed delays ranging between one year and five years in adjudication of demands involving revenue of RS 587.56 crore. Absence of provision in Cenvat Credit Rules, to reverse the proportionate Cenvat credit relating to input services at the time of clearance of input/capital goods 'as such'. We came across 44 cases involving revenue implication of RS 87.37 crore. During the course of this audit examination, we observed 25 cases of incorrect valuation of excisable goods involving duty impact of RS 547.93 crore.

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