Audit of Receipt

How is audit of MODVAT (Modified Value Added Tax) Scheme conducted?
Audit of Receipts under MODVAT scheme is done by verifying that:
(i) MODVAT credit is allowed only when the inputs and final products fall under any of the 73 Chapters prescribed in the scheme.
(ii) In respect of the intimation which the manufacturer has to sent to the concerned Assistant Collectors about the articles on which he proposed to have MODVAT credit and the product that he would manufacture out of those articles, the dated acknowledgement has been obtained and that the articles used and final product manufactured correspond to his earlier declaration.
(iii) MODVAT credit is not allowed in cases where the final product manufactured is assessable to nil rate of duty or is wholly exempt from duty.
(iv) The credit taken in respect of duty paid on raw materials or component parts should be checked with reference to the amounts of duty mentioned on Gate Pass, A R I, Bill of Entry or any other document accompanying the raw materials or component parts evidencing the payment of duty.
(v) Where the same input is used for different finished products, some of which are not dutiable, credit is taken for that part attributable to inputs which are used for the manufacture of dutiable finished products only.
(iv) It has to be seen the MODVAT is not made available for duty paid on non-consumable capital goods used for the manufacture of final products.
(vii) In so far as allowing credit of duty is concerned, it has been allowed in relation to Basic Excise duty, Special Excise duty and Countervailing duty only and such credit has been utilised for payment of basic excise duty only, and
(viii) The excise duty paid on inputs removed for home consumption or for export under bond with the permission of the Assistant Collector is not less than the credit taken by the manufacturer earlier.