High percentage of Modvat credit taken on capital goods - Regarding - Central Excise - 134/45/95-CX

High percentage of Modvat credit taken on capital goods - Regarding Circular No. 134/45/95-CX Dated 4-7-1995 [From F. No. 267/15/95-CX.8] Government of India Ministry of Finance (Department of Revenue) Central Board of Excise Customs, New Delhi 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 20-9-1994 wherein Board had directed that instructions may be issued to field formations to the effect that assessment of RT-12 return should be done expeditiously and that too only after verification 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 misuse detected were further required to be 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 assessess 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 commercial 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. 5. Trade and field formations may be informed suitably. 6. Please acknowledge the receipt of this Circular.