Manual for the Scrutiny of Central Excise Returns 2008

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Chapter 3: Automated Scrutiny of Returns3A The Automation of Central Excise and Service Tax project (ACES) is currently beingdeveloped by Wipro and seeks to automate the checking of returns (see Section 3.1.1). Thescrutiny of assessment would continue to remain manual and would be confined to a fewselected returns.3.1 THE RETURNS SCRUTINY MODULE3.1A Assessees file returns to inform the Department about the amount of duty paid bythem in the assessment account and the CENVAT account during the assessment period. Inaddition, assessees also provide a host of other relevant information. In the ACES project,online filing of returns and the subsequent processing of returns would be handled in acentralized computing environment (see Section 3.1.2). For assessees who already haveaccounting systems in place that generate these returns in the form prescribed bythe government, a facility will be provided to enable uploading of such returns. The applicationsoftware developed by Wipro will create a format to be used by all assessees whogenerate returns electronically for easy uploading.3.1.1 Types of Returns to be Scrutinized by the Automated SystemType of returnER1ER2ER3Category of usersThis is a monthly return filed within ten days of the close of the month to whichthe return relates. It is filed by all assessees of Central Excise who are required toor entitled to file ER2 and ER3 forms.This is a monthly return filed within ten days of the close of the month to whichthe return relates. It is filed by assessees who are 100 per cent EOUs and areremoving goods into the domestic tariff area.This is a quarterly return filed within twenty days of the close of the quarter towhich the return relates. It is filed by assessees who are (a) availing exemptions onthe basis of the value of their annual clearance, manufacturers of processed yarn,and (b) unprocessed fabrics falling under chapters 50 through 55, 58 or 60of the Central Excise Tariff, and (c) manufacturers of readymade garments.(Continued on next page)MANUAL FOR THE SCRUTINY OF CENTRAL EXCISE RETURNS 2008 23
(Continued from previous page)Type of returnER4ER5ER6Returnfor registereddealersCategory of usersThis is an annual return filed by an organization that may have more than oneregistered unit under its umbrella. This return, in part, gives information that canbe verified from the balance sheet as prepared by the assessee, in accordance withSection 211 of the Companies Act 1956. It also gives figures that can be checkedwith the invoices of the organization, and details of trial balances, and the inventorycontrol system (presently covers units paying annual revenue of over Rs 1 crore).Annual return for principal inputs consumed in making finished goods (presentlycovers units paying annual revenue of over Rs 1 crore).Monthly return for principal inputs consumed in making finished goods and forproviding details of scrap and waste cleared or destroyed (presently covers unitspaying annual revenue of over Rs 1 crore).This is a quarterly return filed by first-stage and second-stage registered dealersgiving details of the invoices issued by them and documents based on which creditis passed on.3.1.2 The Automated Returns Scrutiny ProcessProcess ID Process name Brief description of the processRET01 Filing of returns This process documents the online filing of returnsmentioned in Section 3.1.1. It provides certain indicativescreens that would be presented to the assessees. Italso presents validations that the system would performwhile the assessee is filing the return, including theverification of arithmetic computation.RET02 Uploading of returns This process documents the manner in which assessees,who have electronic accounting systems and whogenerate their own tax returns forms, can upload returnspertaining to central excise into the centralized system.This section also provides the upload format to whichsuch assessees have to adhere.RET03 Processing of returns Returns, whether filed online or uploaded, would beprocessed at a specified time every day. This processingwould be taken up as a batch job. The current processdescribes the checks that the system would make duringthis processing.RET04 Review and correction There might be certain discrepancies between thereturns filed by the assessee and those computed by thesystem while processing the returns. The process ofresolving discrepancies would be taken up by acentralexcise official in consultation with the assessee.(Continued on next page)24 MANUAL FOR THE SCRUTINY OF CENTRAL EXCISE RETURNS 2008
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Page 5: 3.1.3 When is a Return Marked for R
Page 8 and 9: Chapter 1: Introduction tothe Retur
Page 10 and 11: Select units could be chosen depend
Page 12 and 13: Chapter 2: Policy Guidelines2A In t
Page 14 and 15: 10 Every six months, the Deputy/Ass
Page 16: Action if answer is No: Reconciliat
Page 19 and 20: ANNEXE 2.1: CHECKLIST FOR THE PRELI
Page 21: ANNEXE 2.2: CHECKLIST FOR SELECTION
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Page 29 and 30: 3.1.4A Once these returns are ident
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Page 33 and 34: 4.2.1 Checklist for Scrutiny of ER
Page 35 and 36: ANNEXE 4.1 CHECKLIST FOR ER1 AND ER
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Manual for the Scrutiny of Central Excise Returns 2008

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