A detailed report of the excise attachment

from 31/8/2015 to 9/9/2015

Jurisdiction attached:

Delhi-I Commissionerate

Team:

Aditya Singh Yadav

Amit Singh Chandel
Aarthi Nair
Arjun Pradhan JMT

Bullo Mamu
Sushma J
Date of submission: 9/9/2015

Index
Pg. No.

..
1. Dayone

2. Daytwo

3. Daythree

4. Dayfour

5. Dayfive

6. Daysix

11

7. Dayseven

15

8. ConclusiveCommentsandobservations

17

9. Annexure1

18

10. Annexure2

19

Day 1: 31/8/2015
1. The team reported in the committee room of CR building
where the Chief Commissioner (CC), Commissioner, Joint
Commissioners of the Delhi Excise commissionerate met
us on high tea. The detailed plan of excise attachment
was broadly laid out. We were advised to take the best
advantage of these attachments as we wouldn't have
much time to learn when we join the service on full time
where we have to take decisions instantly. We were
assigned
into
4
groups
under
respective
commissionerates i.e. Delhi 1, Delhi2, Gurgaon,
Faridabad.
2. Our team was assigned to Delhi 1 commissionerate. The
group members are Aditya Singh Yadav, Amit Singh
Chandel, Aarthi Nair, Arjun Pradhan JMT, Avnish
Parashar, Bullo Mamu, Sushma J
3. Our reporting Commissioner was Mr. Harinder Bhansi.
Our nodal officer was Joint Commissioner (JC)- Digvijay
2

4. We called upon Smt. Sucheta Sreejesh- ADC of

Personnel & Vigilance department. She gave us an
overview of the various activities of her department and
also shared with us her past experiences in this
department and service overall.
5. Next we called upon our Joint Commissioner who gave us
an overview of what all comes under his jurisdiction, how
to approach to various cases at the critical moments and
gave us numerous examples from his experiences. We
were assigned to Asst. Commissioner (AC) Surendar
Malik for guiding and co-ordinating us as per the planned
attachment itinerary.
6. We also called upon Sri. Rajeev Aggarwal, Joint
Commissioner who had made the overall plan of our
attachment inclusive of all groups. He also shared his
experiences with us regarding the in and out of our
department.

Day 2: 1/9/2015

1. We were sent to the range office of Division 1 of Delhi I

commissionerate located at Rajendar Place in New Delhi.
3

The AC in charge was- Mr. Sahil Inamdar. We were

received
by
Superintendents
Rajeswaran
and
Chandershekar who guided us very well and gave in detail
explanation of the jurisdiction of the range, its activities
and their experiences
2. The superintendents gave us an overview of excise act.
We were given a detailed map (See Annexure 1) of the
range. They explained ER1 (ER-excise return), ER3
returns and the registration (for excisable activities)
requirements. They also explained the procedure of
evaluating and inspecting the returns online through ACS.
3. One sample registration was shown to us which carried
details of the company, address, owner, PAN, TIN and
other important details.

4. One sample show cause notice of a company named M/s.

Statco steels which was not a registered company under
excise act (showing turnover less than 1.5 crores) and not
paying excise tax(under rule 4 of CEA,1944)
5. Field visits have reduced as government wants self
assessment and voluntary compliance of taxpayers to
increase and to enable ease of doing business. Since we
have come to self assessment method of evaluation of
excise tax, factory visits cannot be done on own as it
4

would be seen as harassment by department unless any

evidence for any wrong doing by that company. The brief
of working of preventive/anti-evasion departments of
range offices was also explained.
6. Various doubts regarding the above were asked by the
probationers,
which
were
answered
by
the
superintendents in a very detailed way, which instilled
confidence to the probationers about certain concepts on
central excise.
7. The Officer Trainees were given the details about the
Range wise revenue realised during the year 2013-14 and
2014-15. (Annexure)

Day 3: 2/9/2015
Visit to NACEN- to witness the passing out of 65th batch
passing out ceremony.

Day 4: 3/9/2015
1. Visit to legal section- This looks after the cases pending
in High Court/Supreme Court on appeals of CESTAT

order. We were told that the main issue faced by

department is improper representation of facts and case
arguments which is a resultant of poor record
maintenance, follow up and in some cases connivance or
weak build up of cases. Too many case files pending and
too less manpower to work on it. But we were impressed
by the legal acumen and interest shown by the
superintendent who was working selflessly for the
department.
2. Visit to adjudication section- adjudication of various
show cause notices issued by the department- issue of
order in original or de novo orders as in respective cases
were also observed.
3. Visit to review section- to review the orders of the
CESTAT/commissioners.

Sample case followed and observed is as follows:

Review of a Show Cause Notice and Adjudication
order issued in Division I to M/s Swarn Enterprises
The facts of the case were that on the basis of intelligence it
was found that M/s Swarn Enterprises were evading payment
of Central Excise duty by resorting to the suppression of the
production and their clearances, the officers of Central
Excise Division - I searched the factory premises of M/s
Swarn Enterprises on 12.12.2006 by drawing of punchnama
(RUD-1).
6

(PTO)
M/s Swarn Enterprises had contravened
provisions of the Central Excise Rules, 2002:

the

following

Rule 4 & 8 of Central Excise Rules, 2002 in as much as they

have manufactured and cleared the said excisable goods
without payment of Central Excise duty;
Rule 6 of Central Excise Rules, 2002 in as much as they did
not assess the Central Excise duty payable on those goods;
Rule 9 of Central Excise Rules, 2002 in as much as they had
manufactured and cleared the excisable goods without
obtaining Registration from the Central Excise Department;
Rule 10 of Central Excise Rules, 2002 in as much as they
had manufactured and cleared the excisable goods without
proper accounting;
Rule 11 of Central Excise Rules, 2002 in as much as they
manufactured and cleared the excisable goods without
issuing proper invoice; and
Rule 12 of Central Excise Rules, 2002, in as much as they
failed to furnish proper Excise returns to the department.
Adjudication order
It was confirmed that:
1. The central excise duty amounting to Rs.43,503 involved
on the goods manufactured and removed clandestinely
during the period February 2005 to June 2005.
- Central excise duty amounting to Rs.3,77,979 on account
of wrong assessment of the value of goods under Section 4
instead of Section 4A, and

- Central Excise duty amounting to Rs. 3,76,736 on account

of clearance made in respect of killer & 5 CEES brand
which were not their brand and thus were not eligible for
any exemption under Section 11A of the Central Excise Act,
1944.
Adjudication Section
Denovo case
In one of the case department gave appropriate chances of
personal hearing and complied with Principles of Natural
Justice and adjudicated the case without party against which
the party went to CESTAT. The order of the CESTAT was:
from the records it is clear that from the very beginning,
the appellants stand has been that there is no discrepancy
between receipt and consumption of the raw material as
recorded in the RG-23A register and the raw material
consumption based on the quantity of finished goods cleared
as recorded in RG-1 register. The department had
determined the raw material consumption on the basis of
the input output ratio, as mentioned in Para 8 of the SCN
and the quantity of the finished products cleared as per its
calculation. In this regard, the appellants contention is that
there is no discrepancy between the consumption of raw
material as per RG-23A account and the consumption based
on the quantity of finished goods cleared and the input
output ratio. We find that though the appellant have
requested for supply of copy of RG-1 register, the same has
not been supplied and according to the appellant, on the
basis of copies of the invoices available with them they can
prove that there is no discrepancy. The Commissioner has
not given any finding on the appellants request for supply of
copies of the RG-1 register. In view of this, we are of the
view that the impugned order is not correct. The same is set
aside and the matter is remanded to the commissioner for
denovo decision after supplying copies of RG-1 register.
8

Day 5: 4/9/2015
A. Visit to technical and audit section this section
handles
1. RTI queries and appeals- pay fixation and information on
various applications.
2. Preparation of adhoc reports- reports related to certain
cases and notifications or classification.
3. Preparation of regular reports.
4. Pre audit- if refund claim is greater than Rs. 5 lakhs rule
18 of CETA + notification no. 19/2004 CE(NT) dated
6/9/2004. The divisional office is supposed to issue order
for the same.
5. Post audit- if refund claim is less than Rs. 5 lakhs
Discussions about Pre Audit and Post Audit.
A case where refund/rebate of duty paid on exported goods
sought was more than 5 lakhs and the file for pre audit was
seen. The provisions applicable in the instant case were:

Rebate of duty paid on goods exported

Rule 18 of CER, 2002 and notification no.19/2004 CE(NT)
dated 6.9.2004 provides certain conditions:
A request on the letterhead of the exporter containing
claim of rebate, ARE-1 numbers and dates,
corresponding invoice numbers and dates, amount of
rebate on each ARE-1 and its calculations.
Original copy of ARE-1
Invoices issued under Rule 11 of CER, 2002
Self attested copy of Shipping Bill (EP copy) and Bill of
Lading/Airway Bill.
Proof of duty payment
Disclaimer certificate in case claimant is other than
exporter
Any other document in respect of refund claim.
Procedure for refund claim1. Application to be made in field division
2. Details verified by range office for documents and others.
3. Report made by range to division.
4. Draft order prepared by division (AC/DC) based on report.
5. New file opened in HQs to maintain the refund claims.

One sample exemption notification observed while

observing some sample files: section 11(B)(1) with
10

circular refund of excise duty for vehicle purchased by

diplomats residing in India- one year to apply for refund and
3 years vehicle not to be sold
A sample of B1 form (B1 bond) was shown which is used for
availing excise refund for merchandise export- refund to be
given after verification.

B. Vigilance section- This section maintains the details of

the activities of the departmental personnel.
Any anonymous complaint is rejected as it affects
functioning of office and officers. This is because as
many times the anonymous complaints are made
mainly by disgruntled people on personal enmity.

It verifies address/mobile/email of complainant in case

of complaints received and communicates to the
complainant the need to co-operate and comply
whenever required with respect to the complaint made
in the department.
Three types of complaints are there- one against Group11

A Officer, one against Group- B & C Officer, one a

Composite type of complaint involving group A and
other officers.
Complaint against group-A Officer is forwarded to Board.
Complaint against Group B & C and Composite (except
Group A) is being dealt in this office.
When address is not found or incorrect then complaint is
treated as anonymous.
Complaint might be closed with the approval of
disciplinary authority.
If address is found correct, complainant has been called
for Guinness and his willingness for cooperation in
future investigation.
Vigilance cases include Misconduct, Fraud, Bribe.
Non-vigilance cases include Technical lapse, Late
attendance,
Disobedience,
Insubordination,
Negligence, Lack of supervision.
CCS (conduct) rules and Swamys handbooks on
conducts and rules of behavior are followed to prepare
reports.
If officer retires while disciplinary order is pending- board
12

given power on behalf of president to adjudicate.

The aggrieved or ODI (officer doubtful of integrity) list
(after charge sheet is prepared) is prepared by - CBI
member and a commissioner.

Day 6- 7/9/2015
A. Audit- met Sri. S.V Singh, commissioner of Audit
department of Delhi -- 7 circles are in Delhi
commissionerate- 2 of Delhi 1, 2 of Delhi 2, one each of
Sonepat, Rohtak, Panchkula
General observations shared by the commissioner:
The department does a check on department and its
activities in all spheres.
There is lack of manpower and big files make it
disinteresting to handle the auditing work.
This department is unliked by the other sections of
department as it views the orders and activities with a
suspicion and raises objection if any.
Objection raised by audit department include- lack of
documents, wrong interpretations, evasion, connivance
13

 provisional assessment- must be done within the given

bracket of time. Nowadays its not done systematically.
Range office not doing full work
o ER forms not filed on time
o opening balance of current month not equal to
o closing balance of last month
o bills not available in data base
o bills mentioning wrong units, misguides which are
not observed or willfully ignored by the
departmental officers etc.
B. Confidential section- comes under JC/ADC
This department is responsible for
1.Maintenance of ACR- annual confidential report
2.Maintenance of DPC- upto superintendents by March 31
to be done
3.Maintenance ofAPAR- important for promotions, affects it
if not filled on time.
4.Filing of Lokpal from 15 October + filing of IPR (upto
ADC level)

14

5.Exams- STA to inspector, promotion related exams.

6.Any purchase greater than (2X basic pay+ grade pay) to
be reported.
7.Generally observed that there are a lot of backlogs in
APAR- no resume/details etc
8.APAR not yet available online unlike All India Services.
9.NOC for going out of country issued by this department
as it requires vigilance clearance (in case any chargesheet
filed or prosecution pending) in which dismissal/
suspension is pending as per DOPT guidelines

MISC activities of the section To consider promotion of Superintendents to ACcompilation of APAR and other details is done for whole
zone.
Application for passport - white passport is issued for
Group A officers for official foreign visits.
C. Anti Evasion

This section is responsible for following up on all anti

evasion activities of the excisable units in its range
15

jurisdiction. It functions independently.

Assessees information to be collected on evasion if any
through use of information network- informers, disgruntled
employees, market survey, physical verification.
It takes care of deployment of staff matters- capabilities,
evidences etc. for raids etc.
One should not to lose patience and act in haste while of
field duty as resistance and unruly behaviour to be
expected.
The Superintendent or Inspector cannot visit without any
good proof as per rule/regulation/circulars as it is seen as
harassment of manufacturing units in this self assessment
era. So it is preferred to use informers etc to gather proof
for anti evasion.
On raids finance, accounting documents and other proof
collection is more important than cash or other material
seized.
Fake bills available in market- must be noticed
Show Cause Notice (SCN)investigation (within 6 months)

is

final

stage

after

16

 if excess is found than declared- seized or detained, if

shortage is found than declared- duty is asked
panchnamas
are
search/seizure/arrest

important

in

case

of

anti evasion and DGCI activities do not overlap most of

the times
AE1- filing form for information gathered, AE2- filing form
for search/seizure etc.

Day 7 8/9/2015
Visit to factories
1. Ayur Products Pvt. Ltd.
They are engaged in manufacture of shampoos, cold
creams, face gel etc under the brand name of Ayur.
W.r.t. to excisable part,
Section 4 dealing with Transaction Value and Section
4A related to MRP based valuation are applicable
respectively in Ayur. In cases of packing more than 25
kg or less than 10 ml transaction value would be
applicable. The company is registered with Excise
17

department and paying huge sum of duty to Division 1.

The ratio of PLA to CENVAT credit is 75:25.
In case Ayur is selling product to any OEM or other
party then Section 4 would be applicable on Ayur and
Section 4A on OEMs.
(The process of manufacturing is shown in the
Annexure 2)

2. Deltron (CIBIL) Pvt. Ltd.

This company engages in the activity of preparing
diodes, transistors and LED bulbs, tubelights, lanterns
as per the customer requirements. The labs of
manufacturing were shown to us where we could
observe the various fabrication units.
W.r.t. excisable part, they have huge cenvat credit
available with them. Their effective duty payment is nil.
They have huge export orders and cenvat can be
availed only on those orders.

18

3. Aimil Products Pvt. Ltd.

They are engaged in manufacture of ayurvedic
products like cough syrups, skin creams, hair
products under the brand of AIMIL.
They donot avail any Cenvat credit. All their raw
materials are obtained from local market. They pay excise
tax under rule 4A.

Conclusive Comments and observations

1. The departmental staff and the respective officers were
co-operative and friendly and took care of general
requirements daily.
2. The officers we met shared their experiences frankly and
also enthused us about various opportunities and
19

challenges available in the department.

3. We felt that we were exposed widely to all the
departments and got a good experience of the working
of the various departments within our jurisdiction.
4. General things not taught in classroom probation like file
notings etc were also shown and explained to us which
are going to be helpful when we get posted.
5. The factory visits helped us to get an insight into working
of some manufacturing units and the expectations of tax
payers or public in general with respect to our
functioning.
6. Overall, we had a very good attachment which was an
enriching experience with respect to gathering field and
on job knowledge.

Annexure 1
Jurisdiction Map of Delhi

20

Annexure 2
Process Chart of Manfuacture of shampoos

21

22