Modvat Meeting held at Hyderabad on 12-7-1990 - Point No. 12 Regarding Modvat credit on disputable items - Central Excise - 4/91-CX.8

Modvat Meeting held at Hyderabad on 12-7-1990 - Point No. 12 Regarding Modvat credit on disputable items Circular No. 4/91-CX.8 Dated 14-2-1991 [From F. No. 263/5/91-CX.8] Government of India Central Board of Excise Customs New Delhi Subject : Modvat Meeting held at Hyderabad on 12-7-1990 - Point No. 12 Regarding Modvat credit on disputable items. I am directed to refer to the minutes on Point No. 12 of the Modvat meeting held at Hyderabad on 12-7-1990 regarding Modvat credit on disputable items. It had been represented by CEI that there is generally a dispute between the industry and the Central Excise field formations regarding eligibility of certain raw materials as 'input' for claiming Modvat. The industry in order to preserve its right or justify the contention regarding eligibility of Modvat, avails the Modvat credit on such items in RG 23A Part II and keeps it in abeyance without utilisation. Show cause notices are, therefore, issued by Central Excise authorities every 6 months for the same inputs resulting in repeated litigation and consequential hardship to the assessees. CEI had, therefore, desired that some practical way out should therefore, be devised to save this avoidable inconvenience. The matter has been examined. Board has decided that in case of disputed inputs show cause notices need not be issued if the assessee gives an undertaking that the credit would be taken on such disputed inputs only in RG 23A Part I and will not be utilised till the dispute is finally settled. The assessee can pay duty from PLA under protest to the extent of credit involved under disputed inputs. When the dispute is finally settled the credit can be suitably adjusted. Board has also desired that the disputes should be resolved as soon as possible and preferably within a period of 6 months. Trade field formations may be informed suitably. Receipt of this letter may please be acknowledged.