CBEC Circular - Excise Audit has 'statutory backing', Officers can verify records; HC ratio inapplicable
Earlier, in Travelite (India) case [TS-310-HC-2014(DEL)-ST], Delhi HC struck down Rule 5A(2) of Service Tax Rules requiring production of records to audit party on demand and CBEC Circular dated January 1, 2008 pertaining to general audit, as ultra vires the Finance Act. It held that Parliament had clear intention to provide for only special audit u/s 72A of Finance Act on fulfilment of special circumstances, and it did not contemplate a general audit that "every assessee" may be subjected to "on demand".
However, now the CBEC has issued Circular clarifying on powers of Central Excise Officers to conduct audit. Clarifies that the above refereed Judgment does not deal with issue of audit in Central Excise and there is adequate statutory backing for conducting audit by Excise officers.