1. Guidance Note on
Excise

2. Index S. No. Contents Page No. Objective 5-6
Claim of Cenvat on Input
Payment of Excise Duty
On Dispatches
Personal Ledger Account
4. Maintenance of Records
Daily Stock Register (R.G.-1)
Sample Issued

3. Index S. No. Contents Page No. Goods Received as Sales Return
5. Job Work
Goods Sent for job work
Goods received for Job Work

4. Index S. No. Contents Page No.
6. Reconciliation between Accounts
& Excise
7. Export & Deemed Export Sales
8. Statutory Requirements
9. Flow Charts

5. Objective 1.1 Ensure that Proper records are maintained and
systems & procedures are being followed in
accordance with the provisions of The
Excise Act, 1944 & Rules there under.
Funds are not blocked in the Personal
Ledger Account and proper claim has been
made for CENVAT.

6. 1.2 Identify the bottlenecks in the above
procedure & analyze the reasons
there of.

7. Claim of CENVAT on Input
2.1 Ensure that
All the Excisable materials received in the factory premises have been entered in the CENVAT register.
Proper CENVAT have been claimed on the same day of preparation of Goods Inward Note.
CENVAT is claimed for correct value.
CENVAT is claimed on the Original CENVAT
Document.

8. Credit is not taken twice on same invoice.
Credit is not taken without receipt of material.
Credit is not taken on forged and fake documents.
2.2 Verify
CENVAT documents i.e. transporter copy of invoice, Bill of Entry etc. with RG 23A and C Part-II.
2.3 Ensure that
CENVAT credit has been reversed for Rejection/shortage of raw material received.

9. CENVAT credit on capital goods has
been taken upto 50% in current financial year in
which Capital goods are received and balance
50% in any subsequent financial year.
Upto 100% CENVAT credit has been
availed on capital goods purchased & sold in the
same year of receipt .
100% CENVAT credit on the additional
duty leviable under Section 3(5) of the Customs
Tariff Act in respect of Capital Goods has been
availed on receipt of such Capital Goods in the
factory,

10. Credit of CENVAT has been claimed by the assessee properly on input directly obtained by the job worker instead of assessee.
There is proper control over pending 50 % CENVAT credit on capital goods.
Credit of CENVAT has been claimed correctly on input received as captive consumption.
CENVAT credit has been taken on all inputs
including samples / free of cost material received.

11. Ensure that 2.4 Credit on Service Tax
After utilizing credit of Service tax for payment of Service tax liability, unutilized credit of Service tax should be utilized for payment of Excise Duty on monthly basis.
A proper detail of Service tax payable, paid & credit utilized thereof has been prepared to keep control over service tax credit
Payment of education cess is made by utilization of education cess only.

12. Payment of Excise Duty 3.1 On dispatches
3.1.1 Two types of excise duty is liable on the material to be dispatched-
Basic duty.
Special Excise Duty.

13. Ensure that
Amount payable for duty have been adjusted
against available CENVAT credit and not
debited to Personal Ledger Account if
CENVAT credit is available.
Valuation of material dispatched for captive
consumption has been done at current
market price or price for which material is
being sold to other customers .(As per
Notification 64/95 C.E. dated )

14. 3.2 Personal Ledger Account
3.2.1 Verify the
Details of payment made in Personal Ledger Account from Accounts Departments.
Justification for depositing amount in Personal Ledger Account.
3.2.2 Ensure that
Amount has been deposited in Personal Ledger Account on or before due dates, if required.

15. Payment through PLA for one calendar
month is 5th of the following month, if
payment is made by electronic mode then
6th of the following month. For month of
March duty is payable by 31st March.
Verify the
Date of deposit of cheque on Treasury – 6
challan.
If the Excise Duty is not paid by the due date, interest is payable along with the outstanding amount at the rate of 13% p.a. till the date of actual payment.

16. Maintenance of Records
4.1 R.G.I- Daily stock register for finished goods
4.1.1 Ensure that
All finished goods have been entered in Daily Stock Register on daily basis,with quantity mentioned in column 3 of Daily Stock Register with daily production report.

17. All material dispatched have been entered
in Daily Stock Register. Verify the total of
quantity and value for a day with the
concern column of Daily Stock Register.
A separate Daily Stock Statement is
maintained for each item.
Goods should leave the factory after Tax
invoice is prepared.
Tax Invoice should be prepare accordance to
Rule 11of Central Excise Rules 2002.
Finished Goods dispatched as per Daily
Stock Register reconcile with the Gate
Records.

18. 4.2 R.G.23 A & C Part II – Cenvat Register
Ensure that
All the excisable Material received in the factory premises has been entered in the CENVAT register.
CENVAT credit on inputs is recorded in R.G.23A Part II on the same day of preparation of Goods Inward Note.
CENVAT credit on capital goods is recorded in R.G. 23C Part II

19. 4.3 Preparation of INVOICES:
All columns with respect to sale tax particulars,
destination, mode of transport etc. should be
clearly mentioned on invoices.
Any alteration should be duly authorized.
Matching of time of removal as per invoice with
actual time as per gate records.
Vehicle number should be same on invoice &
gate.

20. 4.4 Audit of Sample Issued 4.4.1 Verify the
Record of accounts department with records of Excise department.
4.4.2 Ensure that
Material sent as sample is duly approved.
Excise duty on sample sales has been paid.

21. 4.5 Goods Received as Sales Return/ Rejection.
4.5.1 Verify
Goods Inward Note summary for receipt of material for rectification .
Goods Inward Notes summary with CENVAT register maintained by Excise Department.

22. 5. Job work 5.1 Goods Sent for Job Work 5.1.1 Ensure that
Proper records have been maintained i.e. challans under rule 4(5) (a) of The Cenvat Credit rules, 2004 for goods sent for job work.
5.1.2 Verify
Excise records with store records and gate records on sample basis.
5.1.3 Ensure that
CENVAT credit has been the reversed if goods are

23. 5.1.4 Verify the
Quantity produced after Job work with
Returnable Gatepass Register
not received back within 180 days.
CENVAT credit has been availed when
above said goods are received after 180
days.
All challans for sending material have
been entered into control register.

24. Quantity and description of material to
be send for job work has been
mentioned properly on challans
/registers
List of material not yet received after
job work and check for delay.
Store records for excisable material
send for job work with excise records
on sample basis.

25. 5.2 Material Received for Job Work
5.2.1 Ensure
There is proper control over material received for job work.
5.2.2 Verify the
Excise records with store records/ gate records on sample basis.
5.2.3 Ensure that
Entries for job charges receivable/ received have been passed in accounts.

26. 5.2.4 Verify the
Job work done as per Excise Department with
Accounts department.
5.2.5 Ensure that
Amount has been debited / recovered for own
material used in job work done.
CENVAT credit has been availed at the time of
receipt of material.
Excise duty is paid for material removed after job work same as final product is removed.

27. 6 Reconciliation between Accounts and Excise Department.
6.1 Verify that
Monthly amount of CENVAT as per Accounts Department with Excise Department .
Monthly reconciliation and check pending entries.

28. 7. Export & Deemed Export Sales
7.1 Ensure that
Export sale is being made either under rebate of duty or under bond.
Form CT – 3 certificate has been collected
from the exporter for the deemed Export sale.
Timely submission of ARE – 1 return as
evidence of export dispatch for each
consignment.

29. Obligation and Form Number
Statutory Requirements
Obligation and Form Number
Type of Assessees
Last
Date
Payment of Excise Duty in Challan
Form No.- GAR-7
All assessees (other than SSIs)
5th of every month, 6th of every month for e-payment (except in month of march), for march – By 31st of March
Payment of excise duty in
Form No.- GAR -7
Assessees availing exemption based on value of clearance (SSIs)
15th of every month, 16th of every month for e-payment (except in month of march), for march – By 31st of March

30. Monthly Return
Form No.– ER-1
All assessees(SSIs, Assessees availing area based exemption and assessees manufacturing processed yarn / unprocessed fabrics falling under chapter 50 to 55,58 & 60 of the tariff.)
10th of every month (for removal during the previous month)
Form No.– ER-2
100% EOU for removals made in DTA
Quarterly Return
Form No. –ER-3
SSIs, Assessees availing area based exemption and assessees manufacturing processed yarn / unprocessed fabrics falling under chapter 50 to 55,58 & 60 of the tariff.
20th of every month following the particular quarter

31. Annual Financial Information Statement
Form No.- ER-4
All assessees (other than those who had paid less than Rs. 1 crore from PLA for the previous financial year and ordnance factories)
20th November every year (for the previous financial year)
Annual information on Principals Input
Form No.- ER-5
All assessees (other than those who had paid less than Rs. 1 crore from PLA for the previous financial year and those manufactured goods falling under specified headings)
30th April every year (for the previous financial year)
Monthly return on principal inputs
Form No.- ER-6
10th of every month (for the receipts and consumption of principals inputs during the previous month)

32. Quarterly Return
Form No.- Annexure 13B in Part 7 of this Manual
All Registered Dealers
15th of the month following the particular quarter
Declaration form ( for the persons exempted from registration)
All Persons manufacturing goods which are either chargeable to nil rate of duty or fully exempted persons availing SSI exemption – If value of clearances in preceding financial year was more than Rs. 90 lakhs
For the first category, before commencement of manufacture of such goods .
For the second category , once value of clearances reaches Rs.90 lakhs

33. Penal Provisions Grounds Provision / rules
Quantum of interest/ Penalty/ Other
Contravention of Sec. 8 (Restriction on possession of maximum amount of excisable goods as stipulated by notification) or rule made to prohibit transit of excisable goods or specification of persons requiring registration (incl. attempt to commit / abetment)
Evasion of duty payment (incl. attempt to commit/ abetment)
Section 9
Imprisonment upto 7 years and fine if duty involved exceeds Rs.1 lakh
Imprisonment for not less than 6 months when special and adequate reasons absent
Other cases: Imprisonment upto

34. Removal of excisable goods violating Act/ rules
Possession, transport, deposit, concealment, sale, etc of goods liable to confiscation
Contravention of provisions in relation to Cenvat credit
Failure to give required information or supply of false information
3 years or fine or both
Second/ subsequent conviction under this section – Imprisonment upto 7 years and fine imprisonment for not less than 6 months when special and adequate reasons absent.

35. Duty not paid, short paid, not-levied, short levied or erroneously refunded
Section 11A
Penalty of 25% of duty if duty paid in full or in part with interest within 30 days of receipt of Show Cause Notice.
Delay in payment of duty – after expiry of 3 months from passing order demanding duty
Section 11AA
15%
Delay in payment of duty
Section 11AB
13%
No Interest if duty

36. paid in full foregoing right t appeal when duty becomes due on issue of Order under section 37B
Duty not paid , not levied, short paid, short levied, or erroneously refunded due to fraud, collusion, willful misstatement or suppression or facts with intent to evade duty payment.
Section 11AC
Penalty equal to duty
25% penalty if duty and interest within 30 days from communication of adjudication order
Interest on delayed refund
Section 11BB
6% payable by Department if amount not refunded within 3 months from receipt of refunded claim

37. Interest on amounts collected in excess of duty.
Section 11DD
15%
Publication of names and particulars of persons relating to nay proceedings or prosections under Central Excise Tax in public interest.
Section 37E
No publication relating to penalty till appeal is filed/ disposed.
Failure to pay duty by due date
Rule 8
Of Central Excise Rules 2002
Interest from first day after due date till payment of dues
Default more than 30 days – Consignment wise payment of duty without utilizing

38. Cenvat Credit till payment of dues with interest.
Removal of goods in contravention of Central Excise Rules / Notifications issued under such rules.
Non – accountal of excisable goods
Manufacture without applying for registration Certificate.
Contravention of any provision under Central Excise Rules / notifications issued under such rules
Rule 25
Of Central Excise Rules 2002
Confiscation of goods
Penalty upto duty amount or Rs. 2,000 whichever is greater

39. Possession, transport , deposit, keeping, concealing, etc of confiscable goods
Rule 26
Of Central Excise Rules 2002
Penalty upto duty amount or Rs. 2,000 whichever is greater
Issue of excise invoice without delivery of goods or abetment in making such invoice or issue of (incl. abetment) such document by which ineligible benefit like Cenvat credit is likely to be taken or has been taken
penalty upto such ineligible benefit or Rs. 5,000 whichever is greater
Breach of rules for which no penalty is separately provided
Rule 27
Penalty upto Rs. 5,000 and confiscation of goods.

40. Recovery of Cenvat credit taken wrongly or erroneously refunded
Rule 14
Of Central Credit Rules 2004
Interest payable along with such credit amount and provisions of section 11A and section 11AB applicable
Cenvat credit wrongly availed or in contravention of Cenvat Credit Rules, in case of inputs and capital goods
Rule 15
Of Cenvat Credit Rules 2004
Penalty of Rs. 2,000 or upto duty amount whichever is greater and confiscation of goods
Penalty under Section 11AC also payable if credit availed due to fraud, collusion, suppression, etc with intent to duty payment.

41. Cenvat credit wrongly availed or in contravention of Cenvat Credit rules, 2004 in case of input services
Rule 15
Of Cenvat Credit Rules 2004
Penalty upto Rs.2,000
Penalty as per Section 78 of Finance Act,1994 also payable if credit availed due to fraud, collusion, suppression, etc with intent to evade tax payment
Breach of Rules for which no penalty is separately provided
Rule 15A
Penalty upto Rs. 5,000

42. Flow Charts