MUMBAI, Jan 25: The central excise department of the Ministry of Finance has issued circulars to leading chambers of commerce asking their members not to claim Modvat benefits on excise outgo till March 31, 1998.According to sources at the Bombay Chamber of Commerce and Industry, which has received the intimation, the department has sought the help of large corporate groups like the Tatas, Castrol and M&M, among others, in these "trying times" to defer claiming modvat benefits. The logic being extended is the companies are free to make their modvat claims any time during the course of the next fiscal.
"The entire situation is completely bizarre. The government is trying to improve its bottomline at the cost of ours.
In most engineering companies, almost 70 per cent of the excise levied can be reclaimed as Modvat. If we are not allowed to do so for the next couple of months, it means we will have to take a hit on our earnings and carry it on our books at the expense of our shareholders," an executive
director of one of the country's leading corporate groups said.
The excise department's move has raised several questions in corporate circles. "We are not sure of the legality of the whole exercise. While we can understand the government's anxiety in terms of filling up the coffers at a time when elections are round the corner, we cannot understand how it can report figures that are not quite true," a leading industrialist said.
The excise missive has caught industry by surprise. Various representative bodies are trying to work out the exact impact it will have on bottomlines.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
