Admissibility of Modvat credit due to change in classification - Modvat meeting held at Bombay on 7-5-1990 - Point No. 13 - Regarding - Central Excise - 8/91-CX.8

Admissibility of Modvat credit due to change in classification - Modvat meeting held at Bombay on 7-5-1990 - Point No. 13 - Regarding Circular No. 8/91-CX.8 Dated 16-2-1991 [From F. No. 263/2/91-CX.4] Government of India Ministry of Finance (Department of Revenue) Central Board of Excise Customs, New Delhi Subject : Admissibility of Modvat credit due to change in classification - Modvat meeting held at Bombay on 7-5-1990 - Point No. 13 - Regarding. I am directed to invite your attention to the minutes on point No. 13 of the Modvat meeting held at Bombay on 1-5-1990, on the above subject. Trade had stated therein that at times due to late clarification by the department or subsequent change in the rate of duty, an assessee is deprived of Modvat Credit from retrospective date as no declaration has been filed by his product being initially exempted under a different heading. They therefore suggested that in such cases, Modvat Credit should be permitted retrospectively subject to verification of private records maintained by the assessees. The matter has been examined by the Board. It is observed that the declaration filed under Rule 57G is a statutory requirement and basically a safeguard for the department to varify whether the inputs have actually been received by the assessee or not. If retrospective effect is granted to these declarations it will become different for the department to exercise control thus lead to misutilisation of Modvat Credit. The provisions of Rule 57G do not warrant an interpretation so as to allow retrospective effect to that declaration. Several Judicial pronouncements too endorse the above view. It has therefore been decided. Not to accede to the suggestion to grant retrospective effect to the declarations. Trade field formations may be informed suitably. Receipt of this latter may please be acknowledged.