Audit of Receipt

How is audit of Interpretation of Law conducted?
Interpretation of Law is a judicial function. Audit may point out the following matters in this regard:
(a) Loophole in the Law.
(b) Where certain provisions in the actual working do not apparently bring out the true legislative intention.
(c) Rules, Regulations and Instructions issued by the Revenue earning departments in accordance under their delegated powers.
(d) Exemptions granted by them under their delegated power.
(e) Audit will see that the procedures prescribed by law and in accordance with the guidelines laid down in the Law have been properly observed.

What are the most important functions of Audit in relation to assessment, collections and refund of revenue?
Functions of audit in this case are given below:
(a) The collection and utilisation of data necessary for computation of the demand or refund under the law.
(b) Prompt raising of demands on tux payers.
(c) Regular accounting of demands, collections and refunds.
(d) Correct accounting anti allocation of collections and crediting to the Consolidated Fund.
(e) Proper safeguards to be taken so that there is no wilful ommission or negligence to levy or collect taxes or to issue refunds.
(f) Claims of tax payers are pursued with due effort and are not abandoned or reduced except by the order of a competent authority.
(g) Double refunds, fraudulent or forged refund orders or other losses of revenue through fraud or mistake are promptly brought to the light and to start investigation.

What are the most important functions of Audit in relation to assessment, collections and refund of revenue?
Functions of audit in this case are given below:
(a) The collection and utilisation of data necessary for computation of the demand or refund under the law.
(b) Prompt raising of demands on tax payers.
(c) Regular accounting of demands, collections and refunds.
(d) Correct accounting and allocation of collections and crediting to the Consolidated Fund.
(e) Proper safeguards to be taken so that there is no wilful omission or negligence to levy or collect taxes or to issue refunds.
(f) Claims of tax payers are pursued with due effort and are not abandoned or reduced except by the order of a competent authority.
(g) Double refunds, fraudulent or forged refund orders or other losses of revenue through fraud or mistake are promptly brought to the light and to start investigation.

How audit to the Central Excise Duty is conducted?
The audit to Central Excise receipts is conducted in two parts as under:
(a) Review and test check of all initial assessment documents maintained by the Central Excise ranges and factory/warehouse units under both systems (physical control and self-removal procedure), this is done by the peripatetic parties.
(b) Review of work of departmental internal audit conducted by the Chief Accounts Officer for each Central Excise Collectorate. This is done by a concurrent audit party.
The broad outlines of the techniques of the Central Excise Revenue audit including those followed by the peripatetic parties, may by started by follows:
(a) A study should be made of the manufacturing process of the commodity/commodities concerned with special reference to the raw materials used and the excisability or otherwise of products Formed in the intermediate stage, with a view to satisfying the audit that duly is levied on all excisable materials and that the charge to duty is raised as soon as the goods are in a fully manufactured condition, and not deferred to a subsequent stage.
(b) Correctness of the classification of goods for the purpose of assessment should be invariably examined from all possible angles.
(c) Any assessment at concessional rate of duty should be supported by an appropriate exemption notification. It should be specially seen whether the notification has been correctly applied.
(d) Executive instruction of the Central Board of Excise and Customs authorities non-levy/Concessional levy should be carefully examined in audit.
(e) Where the classification and the rate of duty depend on the test reports of the Chemical Examiner, they should be scrutinised in detail.
(f) All kinds of processing loss and storage loss should be examined to see that the losses were properly attributable to bonafide causes and were not unduly more than what could be justified by genuine causes like dryage etc.
(g) The Movement of goods enjoying special concession/exemption for their use in specified industrial processes should be examined with reference to relevant documents to ensure that goods were not diverted for other uses.
(h) In respect of goods falling under the self removal procedure the materials should be corelated with the finished product with the help of the master formula of production which the license is required to submit to the Collector. Other collateral factors like labour, fuel etc. should wherever possible be taken into account in examining this aspect.
(i) Judicial decisions and standard definitions given by Indian Standard Institute and other recognised bodies should be applied with a view to interpreting the tariff in case of doubt and determining the correct basis of assessment.