TMI Blog2021 (2) TMI 388X X X X Extracts X X X X X X X X Extracts X X X X ..... er this section, the Commissioner of Central Excise is the cornerstone on which the whole scheme of cost audit is balanced. If the Commissioner is satisfied that credit has been availed on excisable goods by a manufacturer which is beyond the normal limits or has been availed on account of fraud, collusion or any willful misstatement or suppression of facts he may direct the manufacturer get his accounts audited by a cost accountant. The cost accountant is then required to submit a Report to the Commissioner within the time specified by the Commissioner. This audit is in addition to all other audits which may have been prescribed by any other law in force. The expenses of the audit as determined by the Commissioner are to be borne by the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otices and all steps and proceedings taken thereunder are set aside and quashed - Petition allowed. - W.P.O. NO.1259 of 1998 - - - Dated:- 8-2-2021 - HON BLE MR. JUSTICE RAVI KRISHAN KAPUR For the petitioner : Mr. Rahul Tangri, Adv. Ms. Udita Saraf, Adv. For the respondent : Mr. Bhaskar Prasad Mukherjee, Adv. Mr. Parashar Baidya, Adv. Ravi Krishan Kapur, J.: 1. The petitioner has assailed a proceeding initiated under Section 14AA of the Central Excise Act ( the Act ). In particular, the petitioner challenges the notices dated 27 November, 1997 issued under Section 14A of the Act and dated 28 November, 1997 issued under Section 14AA of the Act and the consequential actions taken pursuant thereto. 2. The primary grie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee before conducting a special audit. Moreover, the grounds for conducting an audit are in the file of the Department and the Department is not required to disclose the same to the assessee. In any event, according to the respondent authorities, there is no right of hearing afforded to the assessee before the audit is completed. 4. I have considered the submissions made on behalf of the parties. At the outset, Section 14AA of the Central Excise Act provides as follows: 14AA. Special audit in cases where credit of duty availed or utilised is not within the normal limits, etc. - (1) If the Commissioner of Central Excise has reason to believe that the credit of duty availed of or utilised under the rules made under this Act by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MODVAT credit. This section seeks to prevent misuse of MODVAT credit by providing for cost auditing of accounts. Under this section, the Commissioner of Central Excise is the cornerstone on which the whole scheme of cost audit is balanced. If the Commissioner is satisfied that credit has been availed on excisable goods by a manufacturer which is beyond the normal limits or has been availed on account of fraud, collusion or any willful misstatement or suppression of facts he may direct the manufacturer get his accounts audited by a cost accountant. The cost accountant is then required to submit a Report to the Commissioner within the time specified by the Commissioner. This audit is in addition to all other audits which may have been prescr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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