TIME PERIOD OF CERA AUDIT, Central Excise

[manan pandya]

RES. SIR,

let me know that what is the time period for CERA AUDIT.

do they conduct every year ?

regards,

manan pandya

Posts / Replies

[Pradeep Khatri]

Dear Manan,

Please refer appended table in this regard.

Regards,

YAGAY and SUN

(Management and Indirect Tax Consultants)

Time limit and frequency of EA-2000 audit

[C.B.E. and C. Letter F. No. 381/145/2005, dated 6-6-2006]

No.	Quantum of annual total duty payment in (in cash + CENVAT Credit)	Frequency of audit
1.	Units paying more than ₹ 3 crore	Every year
2.	Units paying between ₹ 1 crore and ₹ 3 crores	Once every two years
3.	Units paying between ₹ 50 lakhs and ₹ 1 crore	Once every five years
4.	Units paying below ₹ 50 lakhs	10% of the units every year

[manan pandya]

Res. sir,

you have given time limit for EA-2000 audit but i require to get information regarding CERA AUDIT. (CENTRAL EXCISE REVENUE AUDIT ) which is conducted by Comptroller and auditor general ...

so do the needdul.

regards,

manan pandya

[Rajagopalan Ranganathan]

Sir,

CERA functions under the control of the Accountant General of the concerned state. How they select the manufacturing units/service providers can be found the manual available with CERA. It is for departmental use only. Efen CAG's web site do not display this manual.

[Madhukar N Hiregange]

There has been a challnege to the CAG/ CERA audits that they need to be as per law. Law only provides for audit under sec 14A, 14AA in CE and under Rule 5 read with 72A.

These audit have been said to be invalid and only those conducted by a CA/CMA are valid. See Tertalite + ACL decisions of the high courts.

[Pradeep Khatri]

Dear Manan,

Due to misunderstanding between the audit conducted under EA and CERA provisions, a wrong reply was provided by our team. Sorry for inconvenience caused to you. However, we are sharing with you following important judgments on this subject matter.

It was held by Hon'ble Delhi High Court recently in the matter of Travelite (India) Vs. Union of India and Ors.:

•That Service Tax Department cannot conduct an Audit under Rule 5A (2) of the Service Tax Rules.

•That Service Tax Department can only conduct a Special Audit under Section 72A of the Finance Act.

It is pertinent to mention that recently, the Hon’ble Allahabad High Court in the case of ACL Education Centre Pvt. Ltd. and Ors. Vs. Union of India = [2014 (1) TMI 1562 - ALLAHABAD HIGH COURT] has held that the Audit under service tax is to be conducted by Chartered Accountants/ Cost Accountants only and not by officers of the Department.

Further, the Hon’ble Calcutta High Court in the case of SKP Securities Ltd. Vs. DD (RA-IDT) and Ors. = [2013 (1) TMI 549 - CALCUTTA HIGH COURT] has held that no audit of private assessee can be undertaken by CAG.

You may also get information on the working of the CAG by clicking the appended link.

Regards,

Pradeep Khatri

Founder – YAGAY and SUN

(Management and Indirect Tax Consultants)

[Rajagopalan Ranganathan]

Sir,

As a retired Superintendent of Central Excise and worked as Superintendent of Central Excise (Audit) for two and half years. A Charted Accountant has now power under any law to call for and examine the accounts maintained by the central excise assessee or a service provider. Central Excise Audit party if they found something fishy or mis-declaration or any modus operandi indulgd in by the assessee to evade payment of tax, the audit party with the permission of the Commissioner can refer the matter to preventive wing to investigate the matter. But a Charted Accountant cannot do so. He has to simply accept the statements of Account provided by the assessee and express his about the same.

The certificate given by the Charted Accountant starts with "as per accounts made available and explanation given". If he has no ground to suspect anything fishy he cannot ask any further questions.

However the officer heading a CERA party or Internal Audit Party cannot give a report stating that as per the accounts made available and explanation given by the assessee he is satisfied that accounts maintained by the assessee are proper. If he gives such report disciplinary action will be taken against him. therefore the judgment of Honourable High Courts of Delhi and Calcutta is erroneous and the same is to appealed against in the Supreme Court of India and I am sure the Supreme Court will set aside the orders of the High Courts.

An audit by charted Accountant cannot be substitue for an audit conducted by CERA and Internal Audit.