Modvat Credit - Clarification regarding - Central Excise - 88-CX.3

Modvat Credit - Clarification regarding Circular No. 88-CX.3 Dated 15-2-1988 [From F.No. 267/16/88-CX.8] Government of India Ministry of Finance (Department of Revenue) New Delhi Subject : Modvat Credit - Clarification regarding. It has been brought to the notice of the Board that where the goods are fully exempted but the assessees have opted to pay duty (and not to avail exemption), Modvat credit is not being allowed if such duty paid goods are being used in the manufacture of final products. The matter has been examined by the Board. It has been decided that it is the option of the assessee either to avail of the full exemption available or to pay the duty leviable on the goods manufactured by him. Therefore, if the assesse chooses to pay the duty in spite of the goods being fully exempted, Modvat credit cannot be denied on such duty paid inputs if used in the manufacture of final products. Suitable instructions may be issued to the field formations. A suitable notice may also be issued for the information of the trade. Receipt of this circular may plaease be acknowledged.