Department clarification by Circular on Audit by Central Excise officer

Hon­or­able Del­hi High Court in case of M/s Trav­elite (India) (2014-TIOL-1304-HC-DEL-ST) has held that the pow­ers to con­duct audit as envis­aged in rule 5A (2) of the Ser­vice Tax Rules, 1994, does not have appro­pri­ate statu­to­ry back­ing and there­fore quashed the rule. After this judg­ment doubts has been raised regard­ing pow­er of Cen­tral Excise Offi­cer to con­duct audit.

To resolve this issue, CBEC has issued Cir­cu­lar No. 986/ 10/ 2014-CX dat­ed 9^th Octo­ber, 2014 vide F. No. 206/10/2014-CX.6 to clar­i­fy that in Cen­tral Excise there is ade­quate statu­to­ry back­ing for audit by the Cen­tral Excise Offi­cers. The statu­to­ry pro­vi­sions rel­e­vant for audit are clause (x) of Sec­tion 37(2) and rule 22 of the Cen­tral Excise Rules, 2002. CBEC fur­ther clar­i­fies that the expres­sion “ver­i­fi­ca­tion” used in the sec­tion is of wide import and would include with­in its scope, audit by the Depart­men­tal offi­cers, as the pro­ce­dure pre­scribed for audit is essen­tial­ly a pro­ce­dure for ver­i­fi­ca­tion man­dat­ed in the statute.