How to Do Audit of Excise Duty

As per central excise duty act, there is no statutory condition of auditing of excise duty. But if company audits his audit duty, it will be helpful for company because with audit, all bills, transactions and records relating to excise duty will be checked by professional. So, before paying excise duty, all errors and mistakes can be easily rectify or after paying excise duty, company can claim for refund of excess excise duty payments.

Audit of excise duty is done by CA or cost accountants who are the professionals for all types of audit working.

1. Verification of Bills, Invoices and Documents

CA will verify all the bills, sales invoices and documents relating to the excisable goods which are bought and sell.

2. Review of Excise Duty Valuation

As per current provisions, whether obtained or paid excise duty is correct. It is the duty of auditor to check it.

3. Review of CENVAT Credit Register

Auditor should review the CENVAT credit register and correct the mistake if there is in it.

4. Review of Return

CA should review the return of excise duty which is filled on the basis of self assessment. By reviewing, ca should check the rates and calculations of excise duty and if he or she is confirm, he or she should tick as audited.

5. Review of Reconciliation

There are lots of reconcilations relating to excise duty which auditor should review.

a) Reconciliation between excise duty and VAT
b) Reconciliation between Excise duty payable and CENVAT Credit on inputs
c) Reconciliation between excise duty credit on input services and capital goods.

6.Review of Documents relating to EOU clearance and SEZ

There are economic and export oriented units and special economic zone where govt. gives exemption for paying excise duty and income tax for some time. Auditor should check updated rules and also review of the documents relating to EOU and SEZ.

7. Review of Store and other Records

Auditor should review of store and other records which are relating to excise duty. He should verify each transaction and also check physical quantity.

8. Making of Report

This is the final step of excise duty audit. In this, auditor will make the report inwhich he or she will write his opinion relating to correctness and fair view of excise duty's records.

Related : How to Audit of Service Tax