Excessive Use of CENVAT Credit

By Vijay Kumar

CAG observes that excessive use of CENVAT credit to the extent of seven to ten times of national average in service tax and seven times in central excise in some of selected Commissionerates could indicate the likelihood of misuse of CENVAT credit by assessees. Moreover, around 90 per cent of CENVAT credit availed was not verified by the department through detailed scrutiny and internal audit in 16 ranges.

In view of the large amount of duty being paid through CENVAT credit, Audit is of the opinion that the department needs to strengthen its internal control mechanism using the existing man power judiciously.