Eligibility of Modvat Credit where raw materials are destroyed in fire - Instructions reg. - Central Excise - 66/88-CX.6

Eligibility of Modvat Credit where raw materials are destroyed in fire - Instructions reg. Circular No. 66/88-CX.6 Dated 6-9-1988 [From F. No. 210/42/88/CX.6] Government of India Ministry of Finance (Department of Revenue) New Delhi Subject : Eligibility of Modvat Credit where raw materials are destroyed in fire - Instructions reg. Instances have come to the notice of the Board where raw materials on which Modvat Credit already been taken were destroyed in a fire accident before their use in the manufacture of finished excisable goods. The point involved was whether in such a case the Modvat credit taken on the inputs was required to be reversed or not. 2. The matter has been examined in the Board in consultation with Ministry of Law. The Ministry of Law have inter-alia, opined that credit of duty paid on inputs is permissible only if the inputs are actually used in the manufacture of final products. Therefore no credit of duty paid on inputs which are destroyed before actually being used in the manufacture of final products, would be admissible and so the same should be reversed. The Board has accepted the advice of the Ministry of Law. 3. Pending cases may be disposed of on the basis of the above clarification. 4. Trade interests may also be suitably ad