Circular No. 101/12/95-Central Excise

dated 22/2/95
 F.No.267/14/95-CX-8
 Government of India
Ministry of Finance
(Department of Revenue)
Central Board of Excise & Customs, New Delhi

Subject:- Fraudulent availment of Modvat Credit – Preventive measures- Regarding-

Instances have been brought to the notice of the Board where modvat credit taken on inputs by the assessee was not reversed even after writing off of the materials on which the credit was taken. Cases have also been noticed where the credit had not been adjusted even though the write-off of the input materials had taken place three or four years ago. In such situations, it is obligatory on the part of the assessee to straight away reverse the modvat credit taken under intimation to the Range Officers concerned. Utilisation of modvat credit taken on inputs, which had actually been written off for stock account purposes, clearly will amount to mis- construction and abuse of the modvat scheme.

2. It is felt that by exercising proper checks in time by the officers/ staff and Audit loss of revenue to a considerable extent could be avoided.

3. In order to plug further leakage of revenue, it is directed that the Central Excise Range Officers/ staff, Audit and Preventive parties should keep in mind the possible misuse of modvat credit on this account and conduct proper checks in time.

Sd/-
(I.P. Lal)
deputy Secretary to the Government of India

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