I am directed to say that the Public Accounts Committee in their 104th Report (10th Lok Sabha) has expressed disappointment over the actions taken by the Department where a manufacturer namely Sipani Automobiles Ltd., Bangalore took fraudulent credit to the extent of Rs. 76.84 lakhs in excess of the duty paid on the inputs by availing the credit on forged duty paying documents. They had also entered the closing balance of the credit as receipt, which had further resulted in availment of the excess credit.

2.     In this connection, Public Accounts Committee has observed that as per the provisions of Central Excise Law, the instructions and clarifications given by the Board are not being followed in the letter and the spirit. They have also expressed displeasure on the fact that adequate penal action are not initiated in time and that stern action should be taken against the assessee as well as the officers responsible for the acts of omission commission. In order to enable you to appreciate the recommendations made by the Committee, a copy of the same (para 82, 86 and 92) is enclosed*.

3.     The Board has examined these recommendations and accepted them. Board desires that the recommendations made by the Public Account Committee should be strictly followed and wherever required stringent and stern action should be taken both against the assessee as well as the erring officer.