Verification of Special Additional Customs Duty required - officers must confirm SAD payment before allowing Modvat credit, non payment reported. Range Officers must verify, when allowing Modvat credit on the basis of a Bill of Entry, whether the consignment has suffered Special Additional Customs Duty; if the Bill of Entry does not indicate SAD payment the Range Officer must report to the Commissioner of Customs with a copy of the Bill of Entry for recovery action and initiation of penal proceedings. The Audit Wing should be instructed to check for possible misuse of the exemption notification.