Central Excise Duty reimbursed to Exempted SSI Units - CAG
The CAG's Audit of Andhra Pradesh State Irrigation Development Corporation Limited states,
As per the prevailing system in Andhra Pradesh State Irrigation Development Corporation Limited (Company), component of Central Excise Duty (CED) was shown as part of Estimated Contract Value (ECV). However, the Company was reimbursing the CED only after obtaining documentary proof of payments from suppliers. The Company (March 2005) modified the system of inclusion of CED in ECV and decided to indicate the same under Schedule III, Part A of tender conditions. The production of documentary proof of payment of CED remained unchanged.
For the contracts entered prior to modification of the procedure and pending for payment, the Company issued a clarification (July 2005) based on orders (June 2005) of Government of Andhra Pradesh to release the CED to the contractors and obtain only an undertaking that there should not be any additional commitment to the Government/Company.
It was seen that as a result of this clarification, the Company reimbursed (during 2005-07) CED amounting to Rs. 1.09 crore to units (Small Scale Industries) which are normally exempt from payment of CED. In addition, Rs. 3.21 crore was reimbursed to Non-SSI units without insisting on any documentary proof of payment of CED.
Government accepted (July 2008) the observation and initiated corrective action by ordering the collection of documentary evidence or recover the CED reimbursed.
When the CAG audits these SSI units, it will be pointed out that the amounts are to be recovered under Section 11D of the Central Excise Act.