Subject:-    Seizure of Books & Records by Excise Collectorate - D-I and Notices or Reversal of Modvat Invoices by the Actual users

I am directed to refer the following circulars issued by the Board:-

(i)    Board's circular No. 69/69/94-CX dated 24.10.94 provided that 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 have proper premises for conducting his business and for receipt storage and dispatch of goods.

(ii)    Board's Circular No. 70/70/94-CX dated 24.10.94 provided that where the Modvat has been availed by the manufacturer on the basis of the original copy of the invoice issued under Rule 57-GG, necessary action may be initiated as per provisions of the Act and the Rules.

2.    Subsequent to issue of above circular, Board has received representations from the trade the books and accounts have been seized by certain Collectorates and show-cause -notices are being issued for reversal of modvat credit taken on registered dealers' invoices merely on technical grounds inter-alia of where the registered dealer did not have their own godown premises and that the goods were cleared under the original invoice.

3.    In the above connection, attention in invited to Board's circular No. 96/7/95-CX dated 13th February, 1995 where in it has been clarified that the godown in question can be either owned by a registered person or rented wholly or partially on leases from a private godown owner or public sector godown. As regards passing of modvat credit on duplicate copies of invoices of registered persons, it is seen that Notification No. 2/95-CE(NT) dated in this regard was issued only on 19.1.95.

4.    In the aforesaid background and with a  view to avoid undue hardship to bona fide traders, it has been decided that :-

        (a)    if the applicant meets the conditions as per Board's instructions No. 96/7/95-CX dated 13.2.95, no penal action may be taken for the past;

        (b)    no reversal of modvat credit be required if duplicate copy of 52A/ 57G invoice is available with the unit or the registered dealer and the original copy of invoice moved with the goods in question provided that both the original and duplicate are got defaced by the jurisdictional Range Supdts.

5.    However it should be made clear to the trade that:-

            (a)    no Modvatable invoice (under Rule 57-C) can be (issued unit goods have been received by a registered dealer; and he cannot receive goods without a godown whose locations and other details are entered in his application for Registration lodged with the Range Officer concerned.

            (b)     Invoices under Rule 57(G) cannot be issued by any one on the basis of a photocopy or a copy other than duplicate copy of 52A or 57(G) invoice. Nor can modvat credit be taken  without being in possession of 52-A or 57(G) invoice.

6.    The above principles may be kept in mind while taking the action regarding posing of the modvat credit by the registered persons.