Audit / Pre-audit Services Under Central Excise & Services Tax Audit
In conventional sense, Audit is refer to verification and scrutiny of documents, transaction
and events and processes in order to verify facts and draw conclusions considering the
correctness of recording of facts and the efficiency of a system under study.
For Central Excise concern, Audit is refer to scrutiny of the records of Assessee and
verification & examination of the actual process of manufacturing of goods, classification
of goods, correct valuation, measurement, proper usage of exemption notifications, export of
goods, remission of duty, payment of duty, etc. with a view to check that whether the
Assessee is enable to paying the Central Excise duty correctly and in timely and following
the prescribed procedures.
For Service Tax concern, Audit is refer to examination of scrutiny of the records of Assessee
and verification of the real provision of services, realization of sale proceeds, correct
classification of service, timely discharge of tax liability, timely submitted of returns /
information etc. with a consider to check that whether the assessee is enable to paying the
Service Tax correctly and following the prescribed procedures.
For Cenvat Credit concern, Audit is refer to scrutiny of the records of assessee and
verification of the receipt of Capital Goods, Inputs, accounting, Input Services, availing,
utilizing, timely discharge of tax liability, reversing etc. of credit. Refund of cenvat
credit in case of export, optimum cenvat credit in case Exempted and Non Exempted Goods are
manufactured / Services are provided.
In the conventional / traditional system of Central Excise Audit / Service Tax Audit, Audit
Parties of the Department visit assessee unit / premises. The main objective of above audit
is to check compliance of procedures and also leakage of revenue.
CERA (Central Excise Revenue Audit) or EA-2000 is Audit exercise which is done by the
'FIRE PREVENTION' IS BETTER THAN 'FIRE FIGHTING'.
According to our experience if a periodical Central Excise Audit / Service Tax Audit (with
Cenvat Audit) is carried out by the internal auditors, the management will get great aid to
realize the areas of wrong payment of central excise or service tax or incorrect availment
of cenvat credit and get aid in taking the corrective action immediately.
Simultaneously, if a unit reaches its Central Excise / Service Tax records and documents
audited before departmental audit, that unit can consider the departmental auditors get more
confidence and claim that its records are clean. We recognise this exercise as pre-audit
Under Internal Audit, the auditor take its main focus from both prospective i.e. the approach
of the revenue (departmental) auditors from revenue leakage prospective and correct and
timely discharge payment of duties and taxes while getting all the benefits available in the
statue upto the maximum level.
It has been considered that in sometimes, the units are paying ignorantly more taxes / duties
or due to wrong impression of certain provisions of the law. On the other side, some units
are not availed / utilized the full eligible cenvat credit either on the Capital goods or
inputs or input services due to ignorance.
Even large units which having advanced accounting and inventory software may lack in
compliance of Central Excise / Service Tax and Cenvat Credit to the optimum level due to
reason of complexity of the provision of the acts and rules made there under.
So, a unit should get its Cenvat Credit Records / Excise Records / Service Tax records
audited / checked by experts to ensure / confirm the unit is discharging its excise duty /
service duty liability correctly and timely while making optimum tax planning.
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to audit / pre-audit services under central excise & services tax audit.