Fraudulent availment of Modvat credit - Preventive measures - Regarding - Central Excise - 69/69/84-CX

Fraudulent availment of Modvat credit - Preventive measures - Regarding Circular No. 69/69/84-CX Dated 24-10-1994 [From F.No. 267/92/94-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. It has been brought to the notice of the Board that there is a tendency on the part of some dealers to obtain Central Excise registration, merely for the sake of using their invoice for transfer of Modvat Credit, even though the dealers do not have proper business premises or without any arrangement for receipt, storage and onward dispatch of excisable goods. 2. In this regard attention is invited to the provisions of Rule 57GG which provides for registration under Rule 174. A registration certificate issued under Rule 174 is valid only for the premises specified in such certificates; therefore, registration cannot be granted to person who does not own proper premises for conducting his business. 3. The Board, therefore directs that the Central Excise Range officers/staff, Audit and the Preventive parties shall specially check that the registered dealers are those who have proper business premises and arrangement for receipt, storage and onward despatch of excisable goods. 4. The transport documents etc. relevant for Modvat credit should be shown in the records of such dealers, both while they receive the goods and also while they pass on the goods down the line to others who will in due course, claim Modvat credit. It should be ensured that dealers registered with the Central Excise Department for the purpose of passing on the Modvat credit actually deal in the excisable goods and are not merely name lenders or, are not fictitious entities with only a postal address. However, such checks should be carried out on a selective basis, wherever deemed necessary, with the written permission of the jurisdictional Assistant Collector. 5. Suitable instructions may be issued to the field formations accordingly.