Excise Corruption

I am sharing this post by Radha Banerjee Sarkar in Consumer Circle here as excise corruption discussion is going on.

This needs attention of CVC or other investigation agencies.

IS Central Excise Audit Commissionerate Delhi II a den of corruption, pestering & inefficiency?
A K Banerjee, Editor, Revenue Transparency Times, March 2016. (WWW.thertt.com, e-paper).
It is a known fact to everyone that Customs, Central Excise & Service Tax Department under CBEC is a major contributor to government exchequer. However, rampant corruption is prevailing in the department despite the fact that Central Government is easing out rules and regulation for the trade to carry out smooth business in India. But the roots of corruption are so deep that a few corrupt officers of the department are always exploiting the rules regulation in a manner to exhort money from trade and harass them. RTT has been informed by sources that a few corrupt officers of Central Excise Delhi II Audit are demanding bribe money on percentage basis based on the total turnover of the company. It is really new type of corruption that is taking place in Central Excise Audit Commissionerate Delhi II.
Despite concern shown by PM regarding the functioning of officers of Customs and Central Excise, the corruption and harassment in CBEC has not stopped, rather the quantum of demand of bribe money is touching the sky high in Audit Commissionerate.
In the recent past Punjab Vigilance Bureau nabbed a superintendent Amarjit Singh Dhaliwal in the department of Central Excise and Service Tax red-handed while receiving bribe of Rs twenty lacs in Ludhiana. In his complaint, Gurdeep Singh had said that a case relating to the audit of the Excise and Service Tax of his company, Fastway Citizens Cable Limited, was lying pending with the Superintendent AS Dhaliwal of the concerned department. He had alleged that the Superintendent asked him to give an amount of Rs 3 crore as bribe for the settlement of his audit cases lying pending with him. But later, it was settled that Rs 2 crore would be paid to the officer concerned for the final settlement of the pending cases, he added.“An amount of Rs 60 lakh was asked to be given to the Superintendent before Diwali and the first installment of Rs 20, 00,000 of the money settled was being handed over to Superintendent AS Dhaliwal in a hotel in Ludhiana where he was caught red handed.
Revenue transparency Times in its November 2015 issue published an article regarding Central Excise Audit Commissionerate Delhi II deploying audit officers stationed at Faridabad circle for auditing units located in Gurgaon, Manesar & Rewari and vice versa in violation of CBEC guidelines.
The article emphasized that in Central Excise and Customs it is generally seen that guidelines issued by the CBEC are violated blatantly by the respective Commissionerate by a few corrupt officers for self interest. The then Assistant Commissioner completely misguided the then Commissioner by intimating him that the officers of other audit circles can be utilized to audit the units not falling under the jurisdiction of those circles in violation of CBEC Guidelines( Circular No. 985/09/2014-CX issued under F. No. 206/03/2014-CX.6 dated the 22rd Sept. 2014. Is it mismanagement or a modus- operandi adopted by a few officers Central excise Audit Commissionerate Delhi II for favoring some group and allotting units of their choice so that favored group can exhort money from the central Excise assesses at their will and distribute among all the concern officers. This type of manipulation of allotment of choicest unit to particular group in Audit is very common that is the reason that audit units are selected and distributed by the Directorate General of Audit and intimated to different Commissionerate for conducting audit after cadre restructuring. But it appears that no action against errant officers has been taken resulting in more corruption and more harassment to trade.
Attention is drawn towards minutes of monitoring committee pertaining to Central Excise Commissionerate Audit Delhi II for April 2015 held on 19/5/2015 to 21/05/ 2015 issued under CE/ADT-II/DLH/MCM/01/15-16 dated 21/7/2015.

The Minutes of MCM issued by the Additional Commissioner specified that where ever SCN to be issued the draft of the same should be submitted by group/ Circles within one month of the MCM or at least 15 days before the last date for the issue of same whichever is earlier.
While going through the minutes of MCM, it has been seen that during April 2015, 173 audit paras relating Central Excise were made and the total revenue involved was 762 lacs ,out which 14 Para pertaining to 500 lacs were pending as the assessee did not agree with the contention of the audit group who audited their firm /company. While on Service tax 71 paras were made and total revenue involved was 142 lacs and out of which 8 paras involving duty of 22 lacs to be recovered were pending. It means that 524 lacs out of 905 lacs involved in detection of audit for the aforesaid period is pending i.e. 57% of the detection in April 2015 is unrecovered and is under litigation.
Further, it is seen that serial no 23 of the of the list(minutes of monitoring committee pertaining to Central Excise Commissionerate Audit Delhi II for April 2015 ) shows that during the audit of M/S Anu product ltd Faridabad (APR No. 334/2014-15)four paras were made regarding revenue detection. Para 1 regarding nonpayment of Service Tax on legal service amounting to 4.54 lacs were detected and after deposit of the same by the party para was closed. Similarly para 2 & 3 regarding short payment of service tax 0f 0.91lac and credit taken (observation code IR02) on address other than the registered premises (Central Excise) amounting to 6.88 lacs were detected and after deposit of the amount relating to both the paras were accepted by MCM and were closed.
However, Para 4 (observation code IR02) was again made relating on account of credit taken on address other than the registered premises (central excise) amounting to 4.71 crore was detected . But to utter surprise, the party did not accept the contention of the department and the matter was discussed in MCM and directed to put the issue on file. On discussion on file, Para dropped and the same was mentioned in the minutes of MCM.
A question arises as to how two paras were made on credit taken on address other than the registered premise relating to Central Excise and how the para involving huge government revenue on the same issue has been dropped after not accepted by the party whereas on para made on the same issue involving insignificant amount was approved by MCM and was accepted by the party and revenue was deposited by the party and MCM closed para. The amount involved on para dropped on the same issue is 4 crore and seventy lacs.
It thus appears that either the deposit of RS 6.88 lacs by the party on account credit taken on address other than the registered premises ( Central excise ) was under pressure or dropping of Para on the same issue relating Central Excise amounting to RS 4.71 crore is suspicious. A high level inquiry is required to unearth the truth because a few corrupt officers of Customs, Central Excise and Service tax can do any manipulations to exhort money and revenue loss to government. It should also be inquired whether any show cause notice at a later stage on the same issue was issued or any documents on the same issue were called from the assessee. If so then it will be clear cut case of manipulation, loss of government revenue, misguiding CBEC, flouting all rules and regulation and ultimately to exhort money.
RTT has been informed by sources that even after completion of audit and subsequent finalization in MCM the files are kept alive and the trade is harassed for money. This modes- operandi is adopted by the Central Excise Audit Commissionerate Delhi II as well as Delhi I Audit Commissionerate.
RTT bureau has received documents from trade as well as from sources on the condition of anonymity regarding the corruption and harassment prevailing Central Excise Audit Commissionerate Delhi Ii (Gurgaon).
In a case of one manufacturing unit registered with Central Excise since 1986 manufacturing Molded car carpets, NHV parts for car, NW fabric, and floor covering roll of jute is paying Central Excise duty more than 20 crores per anum and having a work force of 550 is running from pillar to post against the harassment by a Superintendent who conducted CIDA audit of the unit on 17 th march 2015. The said Superintendent and his team have verified the documents demanded from assesse in March 2015 but till date audit has not been finalized and the party is harassed on one pretext or the other despite the fact the party has approached Commissioner of Central Excise Audit II (Gurgaon).
The concerned executive of the said unit pointed out in his written complaint that on 19th March 2015 the Superintendent who along with his group audited their factory once again reached their unit and asked to continue to verify some more records and during that course of audit the said Superintendent used abusive language and behaved very rudely. The matter was brought into the notice of the then Commissioner of Audit but no action till date has been taken. What does this show that all the officers from inspectors to Commissioner are hand in gloves and that is why corruption and harassment is unabated?
Thereafter the said assesse vide their letter 10th April 2015 15th April 2015, 25th may 2015 sent clarification in respect of the query raised by the said audit party but could not pleased the Central excise officers because they could not fulfill the demands of the officers. Sources say that audit of that unit is still going till date and no show cause notice has been issued till date but documents and clarifications are being sought from that assessee and the Commissioner Audit Gurgaon is well aware of the case, but has not taken any action .
Majority of the auditors never adhere to the guidelines given in the Central Excise Audit Manual Para 3.2.2, 3.2.3, and Para 2.3.3 regarding carrying out duties while conducting audit in a transparent way so that the findings are discussed with the taxpayer and an opportunity is given to him . As per the audit manual, auditor should take a balanced, fair and rational approach while conducting the audit and should recognize the rights of the taxpayers, such as, the right to impartial and uniform application of law.
However most of the officers are not accustomed to courtesy because these are officers still lives with colonial mind set and have illusion that they are the masters of these assesses.
6.4.3 Of the Central excise Manual specifies that Commissioner along with Addl./Joint Commissioner (Audit) should interact with senior management of the factories paying annual PLA revenue of above Rs. 5 crores at the stages of Audit Plan and post audit discussions whenever such factories are to be taken up for internal audit.
Revenue Secretary may call for a report as to in how many cases Commissioner along with Addl/Joint Commissioner (Audit) has interacted with senior management of the factories paying annual PLA revenue of above Rs. 5 crores.Certainly the figures and facts in this context will be discouraging across all Audit Commissionerate under CBEC.

Attention is also drawn towards Et order 19/2015 issued by Central Excise and Service Tax Commissionerate I , Faridabad effecting transfer and postings of Assistant Commissioners and distribution of charges to be handled amongst the Assistant Commissioners. But It is strange to note that one Assistant Commissioner has been allotted charges of Anti Evasion, Pre Audit of all Divisions, Personnel and Vigilance, Technical and Stats, Prosecution, and official language . However, three other Assistant Commissioners have been given three charges, one has been given one charge and one has been given two charges.
The Assistant Commissioner who has majority of charges like Anti Evasion, Pre Audit of all Divisions, Prosecution is holding all lucrative and powerful charges. Why this officer has been given six charges. Is that officer so intelligent that he can handle such huge charges or he is enjoying the lucrative charges and is distributing the fruits earned from these lucrative charges amongst the other senior officer?
It is brought into the notice of Chairman CBEC and Member Central Excise that the charge of pre-audit itself is very important as well as voluminous study of documents, rules, regulation, notification and relevant and latest court judgments. Therefore, no officer however brilliant he is can scrutinize and pass order even in one case per day when he is only holding the charge of pre-audit.
Sources say that in Faridabad the concerned Assistant Commissioner is looking after the charge Pre Audit of whole of the Commissionerate and on average the Assistant Commissioner in question deals with approximately 35 files a month. Is it not surprising that a person holding charge of Anti-evasion where more than three thousand assessee are registered and monitoring their revenue trend, keeping an eye of the all India modus operandi of evaders, analyzing the trade and booking the case after gathering intelligence besides keeping a vigilant eye on unregistered units under the geographical jurisdiction of the whole Commissionarate. The capability and ability of the said officer does not end here. He again performs the duties of Assistant Commissioner Technical which in itself a time consuming works with utmost sincerity. Is that Assistant Commissioner is Super Human being--- a He man, Superman, or an extremely efficient or exceptionally master manager.
In Central Excise Delhi II Audit Commissionerate since its existence no regular Additional/ joint Commissioner have been posted. The commissionarate is running with officer having additional charge who despite having best intention can’t perform to the level he intends to.

Similarly Central Excise Audit Commissionerate Delhi 1 are deploying audit officers stationed at Delhi circles for auditing units located in Sonepat and Rohtak and officers from Sonepat are deployed in Panchkula circle for auditing the units located there.
Is it again a mismanagement or a modus- operandi adopted by a few officers Central excise Audit Commissionerate Delhi II for favoring some group and allotting units of their choice so that favored group can exhort money from the central Excise assesses .
Sources say that Central Excise Audit Commissionerate Delhi I is habitual of making unnecessary and irrelevant and repeated objection in files even after the para are approved in Monitoring Committee meeting. Due to this intentionally delaying tactics by senior officers of Delhi I Audit Commissionerate has resulted a huge pendency in issue of internal Audit report (500 IAR) for nearly one year.
One of the Additional Commissioner posted in Central Excise Audit Commissionerate Delhi I has a vast experience of Audit work as he has worked as Joint/ Additional Commissioner and was looking after Audit wing wef 2005 to 2008 for nearly four years in erstwhile Central Excise Commissionerate Delhi I.
The aforesaid Additional Commissioner Central Excise Audit Commissionerate Delhi I should explain under which rule and as to how the file are kept pending for nearly one year in most of the cases after the Audit has been conducted and the paras has been accepted in Monitoring Committee Meeting. This is a modus operandi by such few senior officers to harass the subordinate staff as well as the trade with hidden agenda and ulterior motives which everybody knows.
Chairman CBEC may note that these types of officers are not only defaming the CBEC but also creating hindrance in executing the policies of Central Government. It is also pointed out that a lot of intelligent and honest officers are crushed by the corrupt officers of the department.

Revenue Secretary / Chairman CBEC ought to order an impartial inquiry into the working of Central Excise Commissionerate Audit Delhi I & II to weed out corruption, inefficiency, violation of all rules and regulations & harassment to trade in order to augment government Revenue. more