F.No.275/91/2000-Cx-8A.

Government of India

Ministry of Finance

Department of Revenue

(Central Board of Excise & Customs)

Dated 4th September, 2000

Subject : Disallowance and recovery of Modvat credit on HSD OIL - provisions of section 112 of the Finance (No.10) Act, 2000 - clarification as to whether disputes of credit availed settled under KVSS are recoverable - regarding :-

            Vide Section 112 of the Finance (No.10) Act, 2000 provisions to validate the denial of credit of duty paid on High Speed Oil was introduced. The Chief Commissioner of Hyderabad sought clarification from Board vide his letter C.No.IV/16/86/2000-CC (HZ) dated 10.7.2000 as to whether, in view of the law now in force, whether the Department is entitled to recover the revenue of Modvat credit utilized on account of use of HSD oil by the manufacturers which have since been finally adjudicated/settled under the Kar Vivad Samadhan Scheme. He has expressed his views as under :-

"Section 90(3) of Finance (No.2) Act, 1998 reads as under :

            (3) Every order passed under sub-section (1), determining the sum payable under this Scheme shall be conclusive as to the matters stated therein and no matter covered by such order shall be reopened in any other proceeding under the direct tax enactment or indirected tax enactment or under any other law for the time being in force.

            The benefits of immunity extended KVSS vide Section 90(3) of Finance Act, 1998 has to be constructed as a provision of law. In other words, the said benefit and immunity were not extended as a result of any judgment, decree or order of any court, tribunal or any other authority. Reference to judgment, decree, order etc., in section 112 of the Finance Act, 2000 has a restrictive meaning as to that of an order passed by judicial or quasi-judicial authorities and does not include an act of parliament. I am, therefore, of the view that the benefits and immunities extended under KVSS to cases involving Modvat Credit on High Speed Diesel Oil cannot now be denied by virtue of Clause of 108 of the Finance Bill, 2000."

            The matter was examined in detail and the Board concurs with the view expressed by the Chief Commissioner of Central Excise, Hyderabad. The field formations under your charge may be advised to deal with such cases accordingly.

            Kindly acknowledge the receipt.

Lakhinder Singh

Joint Secretary (Legal)