Modvat Credit Scheme - Special measures to prevent and detect the misuses -instructions

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....administering the Modvat Scheme. It is noticed, inter alia, that the payment of duty from the Modvat Credit account as a percentage of total revenue has increased substantially and consistently during the last decade or so. Consequently, the marginal rate of increase in revenue is not high as it should be. It is felt that some of the manufacturers have taken credit for which they were/are not enti....

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....assed on to other parties without goods, (vii) The goods have been diverted while credit has been taken. (viii) Credit has been taken on capital goods meant for establishing new units in the existing duty paying unit and utilised. 4. The prevalence of such malpractices indicate that there is a need for conducting Modvat checks effectively. 5. Tile Board desires that the field officers should c....

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.... of correctness of Modvat at credit availed and utilised in the last five years, the Commissioners should select the units who have availed more than one crore credit in a year and these should be checked by Special Modvat Verification Teams constituted especially for this purpose with clear in instruction however that no harassment is caused to the assessees in the process. 7. The audit parties ....