Modvat Meeting Resolves Credit Dispute: No Show Cause Notices if Credit is Unused Until Resolution.

A Modvat meeting held in Hyderabad on July 12, 1990, addressed disputes over the eligibility of certain raw materials for Modvat credit. The industry often claims credit on these items but keeps it in abeyance, leading to repeated show cause notices and litigation. To alleviate this issue, the Central Board of Excise & Customs decided that show cause notices need not be issued if the assessee undertakes not to utilize the credit until disputes are resolved. The assessee can pay duty under protest, and credit adjustments can be made once disputes are settled, ideally within six months.

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