Input vat restriction on stock transfer

We are manufacturers in Andhra Pradesh. we are importing raw material  alwell as local purchases.

At the same time we are doing CST Sales, VAT sales, and Stock Transfers. In the APVAT assessment time CTO issued show cause notice to restrict input vat credit as per AP VAT act.

1)I have one doubt that we are importing raw material.On imports there is no vat input credit. So why should we restrict the input vat Credit (ITC)? is there any judgement ? If anybody knows please suggest me. It is more helpful for us.

gopal/