The apex chamber said that such measures have led to a severe breakdown of industry's confidence and vitiated the relation between the assessees and the collectorates.

CII stated that the arbitrary disallowance of Modvat to the industry in early 1998 had thrown the entire industrial activity out of gear. The disallowance of the same within a year is most unfortunate and a retrograde step, CII added.

According to the chamber, the need of the hour is building up of partnership based on trust and confidence rather than such damaging measures, which would result in a severe setback in the confidence of the corporates.

CII pointed out that in order to bridge the gap between the revenue target and actual collections, this practice primarily began with a friendly advice to the industry to make payments bycash through Personal Ledger Account (PLA) rather than utilising the Modvat credit.

Later on, however, it has taken more coercive forms like withdrawing of Modvat registers of corporates on the pretext of scrutiny thereby stopping it during investigation, the chamber added.

CII further said that the assessees are required to submit their Modvat registers along with the duty-paying documents for verification on a monthly basis and thereby there is no specific cause for withdrawal of them.

In this particular year, CII has stated that the excise department has started this exercise as early as November. The excise collectorates have been approaching major revenue paying units for payment of duty through PLA and not to use Modvat credit, the chamber added.

CII stated that if the accumulated balances in the Modvat account is released for utilisation in the next year, the revenue for the succeeding year would also be correspondingly less. CII stressed that the government, while preparing budget, should takeinto account the ground realities and then proceed to set its revenue targets rather than adopt such counter productive measures.