Internal audit checklist process purchasing category exicise

1. Internal Audit Checklist
Process – Purchasing
Category – Excise
Sr No. Check List Remarks
1
• Ensure that the Modvat / Cenvat is claimed and credit is taken in the
excise records immediately after the receipt of the material. There
should be no delay in taking the credit of Modvat / Cenvat once the
material has been received. Calculate the loss of interest due to delay in
Modvat / Cenvat claim.
2
• Challans / invoices in respect of material sent for processing should
be received back in the plant within 6 months. Ensure that the material
sent outside the factory for processing is received back in the factory
within 6 months from the date of dispatch. (180 days). (A delay beyond
180 days would result in a loss of Modvat / Cenvat to the sender).
3
• Check whether the statutory records PLA and RG - I are properly
maintained.
4
• Check whether the classification, declaration, Price declaration or
MRP value, declaration of marketing pattern, and discount structure are
filed by 15th
April every financial year.
5
• Check whether RT-12 returns have regularly been filed with the
excise authority by 10th
day of the following month accompanied by
copies of PLA and TRG challan and Cenvat monthly return. An
acknowledgement should be obtained from the Excise Department.
6
• For export sales ensure that applications in Form AR4 and the
original invoices have been submitted to the excise authorities.
7
• Credit on Capital goods is to be taken immediately in the same
financial year up to 50% of duty paid and the balance credit in any
subsequent financial year provided capital goods are still in possession
and use of the manufacturer. Ensure that the above provision is taken
care of.
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2. Internal Audit Checklist
Process – Purchasing
Category – Excise
8
• Further the cenvat credit is allowed even if the goods (Input /
Capital) are acquired by the manufacturer on lease, hire purchase or
loan agreement from a financing company. The credit is not allowed if
the manufacturer claims depreciation under Section 32 of the Income
Tax Act on the amount of duty paid. Check whether the above
provisions have been considered while considering the Modat / Cenvat
Credit.
9
• The Excise law / rules should be referred from time to time as the
provisions change every year.
10
• Ensure that full Credit for Modvat / Cenvat / PLA has been taken by
20th
of every month in respect of duty debited for despatches made
during 10/15th
day of the month and full credit is taken by the 5th
of the
next month in respect of duty debited for dispatches made between
16th
to 30/31st
of the month. Ensure that there is no lapse on this account
and that the duty credited is equivalent to the duty debited on fortnightly
basis.
11
• Ensure that Cenvat account debit should be limited to the Credit
balance available on the 15th
day and the last day of the month
respectively.
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