Scrutiny of Returns is neglected area in Central excise - CAG

By Vijay Kumar

THE CAG in its latest report to Parliament on Central Excise observed that scrutiny of returns was a neglected area.

CBEC introduced self-assessment of Central Excise duties in 1996 and for Service Tax in 2001. With the introduction of self-assessment, the department also provided for a strong compliance verification mechanism through scrutiny of returns/ assessments, internal audit and anti-evasion. The crucial role of scrutiny of assessments as highlighted in the Report of the Task force on Indirect Taxes 2002 states "It is the view that assessment should be the primary function of the Central Excise Officers. Self-assessment on the part of the taxpayer is only a facility and cannot and must not be treated as a dilution of the statutory responsibility of the Central Excise Officers in ensuring correctness of duty payment. No doubt audit and anti-evasion have their roles to play, but assessment or confirmation of assessment should remain the primary responsibility of the Central Excise Officers".

CAG detected irregularities which could have been detected had the department conducted the scrutiny as per the prescribed procedures.