Records, Returns and Documents - Central Excise Practice Manual (OLD) - Central Excise

RECORDS, RETURNS AND DOCUMENTS Records: Every assessee is required to maintain private records as a compulsorily activity. They do not have to maintain statutory records. According to new Central Excise Rules 2002 the Government has decided to rely on private records of the assessee which they usually maintain for their activities. Meaning of records: Records shall mean all the records prepared or maintained by the assessee for accounting of transactions and therefore consist of the following - Accounts prepared with regard to receipt, purchase, manufacture, storage, sales or delivery of the goods including inputs and capital goods. Agreements Invoices i.e. sales invoice, purchase invoice Price-list Returns Statements Any other source documents such as journal voucher, delivery challan, debit or credit note. Following are the main requirements of 'private records': 1. The rules which require certain records to be maintained, are self contained and they specify the minimum information that an assessee must enter in their own records. 2. No specific format has been provided for record-keeping, except in case of 100% EOU unit and FTZ/SEZ. These units shall maintain in proper form [Notification No. 59/2001-CE] appropriate account relating to production, description of goods, quantity removed, duty paid and each removal shall be made on an invoice. 3. There is a specific requirement about maintenance of 'Daily Stock Account' as specified in Rule 10. This account should be prepared on daily basis in a legible manner indicating the following particulars: Description of the goods produced or manufactured Opening balance Quantity produced or manufactured Quantity removed/ cleared Closing balance Assessable value Amount of duty payable Details of duty actually paid 4. It is the statutory requirement that all records shall be preserved for a period of at least 5 years starting immediately after the financial year to which such records pertains. For e.g. records for financial year 2006-2007 shall be preserved till 31 st March 2012. 5. All records i.e. any book or register and Daily Stock account shall be authenticated on the first and last page by the producer or the manufacturer or his authorized agent before these are brought into use by an assessee. However there is no requirement of authentication of records by jurisdictional Central Excise Officer. 6. It is a statutory requirement to furnish to the Range Officer a duplicate list of all the records maintained by every assessee for accounting of transactions with regard to receipt, purchase, manufacture, storage, sales or delivery of the goods including inputs and capital goods. Any modification in the list shall be intimated to the Department as and when such modifications take place. 7. Every assessee shall, on demand make available to the Range Officer duly authorized by commissioner or the audit party deputed/ employed by the commissioner or the Comptroller and Auditor General of India the following records and documents: Records maintained or prepared by him in terms of sub-rule Rule 22(2), Cost audit reports, if any, as per section 233B of The Companies Act, 1956, Income tax audit report, if any, as per section 44AB of Income-Tax Act, 1961, for the scrutiny of the officer or audit party, as the case may be. 8. Where the assessee is having more than one factory and maintains separate records in respect of each and every factory for the purpose of audit, then he shall produce all such records for audit purpose. 9. Maintenance of Records Electronically :- Assessee can maintain the records electronically. 10. Non-maintenance of records: Non- maintenance of records will attract penal action as this is against the rules. Therefore it is advisable to fulfill all the requirements of maintenance of records in order to avoid penalty. Returns: The Rule 12 of Central Excise Rules, 2002 provide that the assessee shall be required to file certain periodic returns relating to his tax liability and other transactions, such as relating to Cenvat credit. Normally there are following types of returns - 1. Monthly/ Quarterly return [ER-1/ ER-2/ ER-3] - a) Every assessee not availing SSI exemption has to be file a monthly return, of production and removal of goods, and Cenvat credit availed by 10 th of the following month in Form ER-1 (EOU units and FTZ/SEZ units shall file return in Form ER-2). b) SSI units availing SSI concession on the basis of annual turnover shall have to file return on quarterly basis by 10 th of next month of the following quarter in Form ER-3. Procedure of filling ER-1/ ER-2/ ER-3 returns: Return shall be filled with the jurisdictional Range Superintendent. Return shall be filed in quintuplicate. Basic details required in ER-1/ ER-2/ ER-3 returns are: i. Period of return filled. ii. Name, address and registration no. of assessee. iii. Details of goods manufactured, cleared and duty payable. iv. Details of duty paid through Cenvat credit with their types and PLA. v. Details of other payments such as arrears, interest etc. vi. Self assessment memorandum. vii. Details of removals of non-excisable goods viii. Details of removals under rebate, bond, advance licence, drawback etc. ix. Details of provisional basis of duty. Return shall be accompanied by the following documents - i. TR-6 challans for any deposits/ payment of duty made in PLA. ii. Original and duplicate copies of PLA (PLA extracts upto 5 th or 5 th of following month i.e. till payment of duty). A summary of PLA extract could also be put at the end of the PLA extracts indicating: - Opening balance after discharging duty liability of previous month. - Credits during the month and upto 5 th (5 th for SSI) of following month. - Total duty discharged through PLA during the month. - Closing balance after discharging duty liability. The assessee shall obtain an acknowledgement for having filed the return. 2. Annual Financial Information Statement [ER-4] - Assesses paying duty of Rupees one crore or more per annum through PLA are required to submit Annual Financial Information Statement for each financial year by 30 th November of succeeding year in Form ER-4. Details required in ER-4 are as follows: Value of inputs. Expenditure under specified heads. Goods manufactured by assessee through job-worker, if any. Job-work undertaken by assessee itself, if any. Sales of major finished goods accounting more 10% or more of total value. Raw materials accounting 10% or more of total raw materials. Other income, if any. 3. Annual Information relating to Principal Inputs [ER-5] - Assesses paying duty of Rupees one crore or more per annum through PLA and manufacturing goods under specified tariff headings are required to submit Information relating to Principal Inputs every year before 30th April in Form ER-5. Any change in principal inputs is required to be intimated to the Superintendent of central Excise in Form ER-5 within 15 days. Details required in ER-5 return are as follows: Principal inputs (means inputs whose cost constitutes 10% or more of total cost) used in the manufacturing of each of finished goods. Quantity of principal inputs required in the manufacturing of each of finished goods. Note: specific tariff headings are 22, 28 to 30, 32, 34, 38 to 40, 48, 72 to 74, 76, 84, 85, 87, 90 and 94. 54.02, 54.03, 55.01, 55.02, 55.03, 55.04. 4. Monthly return of Receipt and consumption of each of Principal Inputs [ER-6] - Every assessee who is required to submit return under ER-5 is also required to submit monthly return of receipt and consumption of each of principal inputs by 10 th of the following month in Form ER-6. Details required in ER- 6 return are as follows: Inputs taken for manufacture. Opening and closing balance of inputs. Quantity of finished goods manufactured. Non- submission of Return - Non-submission of return on or before due date will attract penalty upto Rs.10,000 as per Rule 27 of Central Excise Rules. Even when there is nil duty, a nil return has to be filed if goods are excisable goods Scrutiny of the returns: The return will be scrutinize and verified by the departmental officers. They can demand any documents for verification at any time. For detail information please refer Chapter No. 17 (Assessment) Electronic maintenance of records and filing of returns: Assessee has the option to maintain the records, documents and file the return through internet i.e. in electronic form. Following are the requirements of this alternative - 1. No specific permission/ intimation is required from/ to the department. 2. The records, documents and records of return filled shall be kept/ preserved for a period of 5 years by keeping their back-ups on any electronic media such as hard disk of computers, floppies, CDs etc. 3. The printouts should be taken out at the end of each month and kept in bounded folder. 4. On demand the assessee should provide all these for the required period either in the form of soft copy or hard copy. 5. In case of e-filling of return system can accept late return, but these will be marked as late return also once electronic return is filled submission of manual return is not necessary.