CHAPTER 6

RECORDS AND RETURNS

Part-I

Records
1. Introduction

1.1 Records are to be necessarily maintained in the course of any business activity.These records are also used to determine the tax liability of the assessee. Earlier, for thispurpose the Government had prescribed the records to be maintained, referred to as‘Statutory records’. The statutory records under Central Excise Rules, 1944 weredispensed with in the year 2000 and it was decided to rely on private records of theassessee. This was done as a measure of simplification and for adopting a commonaccounting system. While framing the Central Excise (No.2) Rules, 2001 (hereinafterreferred to as the said Rules), CENVAT Credit Rules, 2001 and other Rules issued underCentral Excise Act, 1944, the Government has continued with the policy of relying on theprivate records of the assessee.

2. Private records

2.1 The main features of the acceptance of private records are as below: -

(i) The fact that the rules do not prescribe ‘statutory records’ shall not beconstrued that no record has to be maintained. Every assessee shallmaintain private record.

(ii) the rules which require certain records to be maintained, are selfcontained and they specify the minimum information that an assesseeMUST enter in their own record;

(iii) There is no format for record–keeping, except in the case of Rule 17 of thesaid Rules where it is provided that the 100% EOU unit or a unit in /FTZ/SEZshall maintain in proper form appropriate account relating to production,description of goods, quantity removed, duty paid and each removalshall be made on an invoice. This Format has been notified byNotification No. 59/2001-CE(N.T.), Dated 6 th August, 2001 and isgiven at (Annexure-11).

(iv) This means that the assessee is free to device his record-keeping,depending upon his accounting requirements but shall ensure that therequirements of particular rules are met;

(v) There is a specific requirement about maintenance of “Daily StockAccount’ in rule 10 of the said Rules. It provides that every assessee shallmaintain proper records, on a daily basis, in a legible manner indicatingthe particulars regarding description of the goods produced ormanufactured, opening balance, quantity produced or manufactured,inventory of goods, quantity removed, assessable value, the amount ofduty payable and particulars regarding amount of duty actually paid. Thefirst page and the last page of each such account book shall be dulyauthenticated by the producer or the manufacturer or his authorisedagent. All such records shall be preserved for a period of five yearsimmediately after the financial year to which such records pertain.

(vi) There is no requirement of ‘authentication’ of records by jurisdictionalCentral Excise Officer before a book/register is brought into use by anassessee. These records (relevant for Central Excise) shall, however, beauthenticated on the first and last page by the assessee in the samemanner as the Daily Stock Account. They shall also be preserved for aperiod of five years immediately after the financial year to which suchrecords pertain.

(vii) Every assessee is statutorily required to furnish to the Range Officer, a list induplicate, of all the records prepared or maintained by him foraccounting of transactions in regard to receipt, purchase, manufacture,storage, sales or delivery of the goods including inputs and capital goods.

(viii) Every assessee shall, on demand make available to the Range officer dulyempowered by Commissioner or the audit party deputed by theCommissioner or the Comptroller and Auditor General of India,-

(a) the records maintained or prepared by him in terms of sub-rule(2) of rule 22 of the said Rules;

(b) the cost audit reports, if any, under section 233B of theCompanies Act, 1956 ( 1 of 1956); and

(c) the Income-tax audit report, if any, under section 44AB ofIncome-tax Act, 1961 ( 43 of 1961),

(d) for the scrutiny of the officer or audit party, as the casemay be.

(ix) Every assessee who is having more than one factory and maintainsseparate records in respect of every factory for the purpose of audit,then, he shall produce the said records for audit purposes.

2.2 Records shall mean all the records prepared or maintained by the assessee foraccounting of transactions in regard to receipt, purchase, manufacture, storage, sales ordelivery of the goods including inputs and capital goods. All accounts, agreements,invoice, price-list, return, statement or any other source document ,whether in writing orin any other form shall be treated as records. Source documents are those documentswhich form the basis of accounting of transactions and include sales invoice , purchaseinvoice, journal voucher, delivery challan and debit or credit note.

2.3 Every assessee should be asked to furnish the list of all records prepared ormaintained by him for accounting of transactions in regard to receipt, purchase,manufacture, storage, sales or delivery of goods including inputs and capital goods, ifthey have not done it so far. If there is any modification in the list, the same may becommunicated to the Department as and when such modification takes place.

2.4 Non-maintenance of daily stock account as contemplated under rules or otherinformation mentioned in other rules mentioned above by the assessee in his privaterecords will mean contravention of specified rules attracting appropriate penal action. Ifsuch non-maintenance of records is with intent to evade payment of Central Excise duty,the more stringent penal provisions of the Central Excise Act and Central Excise Rulesshall be attracted. Trade and industry are advised to ensure that the requisite informationas required under amended rules is scrupulously maintained in their identified privaterecords to avoid any penal action.

2.5 The private records relevant for Central Excise including the Daily Stock Accountmaintained in compliance with the provisions of the said Rules shall necessarily be kept inthe factory to which they pertain.

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