Cera audit

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Querist : Anonymous

Querist : Anonymous (Querist)

12 August 2011 A company has made provision for write off for raw material & stores worth Rs.72 lakhs for the accounting year 2007-08 to 2009-10. Cenvat reversal credit of Rs.7.87 lakhs.

CERA has asked to ascertain / determine the details of cenvat credit availed vis a vis quantity, description, invoice details,etc. which the company is not in a position to provide as these are all very old materials & stores.

CERA has informed that they will issue notice u/s 14 of Central Excise Act, 1944.

Pls. advice on the course of action that one can take.

U S Sharma

U S Sharma (Expert)

12 August 2011 there are minimum basics for computation of 72 lacs, as it can not be done verbally

go for the computation of these 72 lacs and track the stock closer to the day of such transaction and put the nearby approx transaction for reversal purpose.

Querist : Anonymous

Querist : Anonymous (Querist)

12 August 2011 it is not possible to track the records as these are materials which might have purchased some 15 years back, if not more.

U S Sharma

U S Sharma (Expert)

12 August 2011 if its not possible then how did you determined the value of such goods?

U S Sharma

U S Sharma (Expert)

12 August 2011 department can not go beyond 5 years in normal cases, so establish anything which is more than 5 years as produce those records to audit, confirming approx value

once notice u/s 14 is issued it will end at section 9, so try to produce something which is admissible and they can rely upon.

its just game of maths, confirming the balance sheet stock valuation, you can get help of your CA to make such data with your purchase sheets of previous years.

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