In accordance with circular No. 809/6/2005-CX dated 01.03.2005, wherein the procedure relating to sanction and pre-audit of refund/rebate claims has been prescribed.

Now after taking serious notes on procedure of pre-audit before sanction of refund by the High Courts as amounts to interference with the quasi-judicial function of the refund sanctioning authority, board has issued following guidelines: (See - Circular No.857/15/2007/CX dated 2-11-2007)

The matter has been examined. Pre-audit of refund and rebate claims serves the twin purpose of ensuring uniformity in procedure and enables effective monitoring of sanction of refund/rebate claims. Therefore, this procedure cannot be dispensed with.

However, in view of the observations of the Hon'ble Courts, it has been decided that pre-audit of all refund/rebate claims will be conducted by the Assistant/Deputy Commissioner (Audit), in the Commissionerate Headquarters Office. Thereafter, the Divisional Assistant/Deputy Commissioner will pass an order-in-original in respect of the claim. Accordingly, the present system of pre-audit of claims by Commissioner would henceforth be dispensed with. However, the orders-in-original passed in this regard shall be subjected to review by the Commissioner.

Pre-audit requirement retained but shifted to Assistant/Deputy Commissioner (Audit) at Commissionerate headquarters before divisional orders-in-original and review. Pre-audit of refund and rebate claims remains mandatory to ensure uniformity and monitoring; it will be conducted by the Assistant/Deputy Commissioner (Audit) at Commissionerate headquarters, after which the Divisional Assistant/Deputy Commissioner will pass the order-in-original. Pre-audit by the Commissioner is discontinued, while the Commissioner retains review authority over orders-in-original.