Circular No. 134/45/95-CX dated 4/7/95
Subject:-High percentage of MODVAT credit taken on capital goods -
Regarding -
I am directed to refer to Board"s Circular No. 62/62/94-CX dated 20.9.94
wherein Board had directed that instructions may be issued to field informations to
the effect that assessment of RT-12 return should be done expeditiously and that too
only after vertification of the duty paying documents on the capital goods. An
evaluation report alongwith views and suggestions if any and the statistical data of
the Modvat credit taken on the capital goods and misusc detected were further required
tobv furnished to the Board.
2. Subsequent to the issue of above instructions it has come to the notice of the
Board that a substantial amount of Modvat credit has been availed on goods which are
either not capital goods or which are capital goods but which have not been used for
producing or processing of any goods or for bringing about any change in any substance
for the manufacture of final products as required under Rule 57Q of the Central Excise
Rules, 1944.
3. In view of above, it has been decided that the declarations submitted by the
assessee to the Range Officer should be verified as early as possible preferably
within three months of the submission of the said declarations to the Range
Superintendent, and a copy be forwarded immediately to the Divisional Assistant
Commissioners so as to take necessary action for detecting irregular credit availed if
any.
4. Further, if purported Modvat credit is not Modvat credit within the scheme of
Modvat credit, for example where credit is availed on goods which are neither inputs
nor capital goods or when credit is availed on comnlercial invoice etc., then the same
should be got reversed forthwith. Making reversal of such credits dependent on long
drawn quasi-judicial proceedings would make us fall into the trap of unscrupulous
assessees at the cost of substantial revenue loss.
Sd/-
(Mallika Arya)
Under Secretary to the Government of India
F.N.267/15/95-CX-8Presented by eximkey.com