CBEC for audit team on Modvat

The findings of the study were then put up to the board, which made its recommendations. Commissioner of central excise Virendra Singh said that discrepancies were noticed during their investigations and the department had booked 62 cases while Modvat credit to the tune of Rs 62 lakhs was reversed.

The investigations covered four stages 8212; Modvatable invoices, stocks with dealers, verification of goods which are received against Modvatable invoices and forward movement of goods against invoices.

Shortages were perceived in respect of goods sent and received by the jobbers 8212; that is, the invoices and the physical verifications made did not match. Theanti-evasion wing of the excise department has undertaken this comprehensive audit after a long time, said Singh.

In spite of varying measures taken last year by the excise collectorate to check Modvat misuse, it still goes on rampant, said sources. Registered Modvat dealers constitute a significant segment, which is responsible for large scale misuse of Modvat. In fact, the task force which was set up to check Modvat misuse had also commented on the necessity to escalate controls on such dealers.

Sources said special audit would soon be carried out on a selective basis focusing on certain special segments such as the tyre industry, which has been found to be largely culpable in the past.

The excise department would also pinpoint Modvat misuse in case of sensitive commodities, which Singh said, had a significant impact on revenue.

On the recommendations made by CBEC, field officers would be instructed to undertake stock verifications by surprise, Singh said. Stocks of inputs on which credit wasavailed would also be verified, he said while checks would be intensified on Modvat related goods and documents.

The excise collectorate had recently taken to coercive tactics to plug revenue leakages from Modvat misuse. For instance, early last year it disallowed Modvat credit.

Then in November it resorted to withdrawals of Modvat registers of corporates saying they needed scrutiny. This resulted in stoppage of Modvat credit during the period of investigations.