Admissibility of Modvat credit on Acetone used in the manufacture of Acetylene - Clarification regarding - Central Excise - 50/88

Admissibility of Modvat credit on Acetone used in the manufacture of Acetylene - Clarification regarding Circular No. 50/88 Dated 17-10-1988 [From F. No. 267/78/88-CX.8] Government of India Ministry of Finance (Department of Revenue) Central Board of Excise Customs, New Delhi Subject : Admissibility of Modvat credit on Acetone used in the manufacture of Acetylene - Clarification regarding I am directed to say that doubts have been raised as to whether Modvat credit would be admissible on the acetone which is used as a solvent for dissolving acetylene for transporting and marketing purposes and dissolved acetylene. 2. The matter has been examined by the Board. It is observed that Acetylene is highly cumbustible gas which bursts at high pressure. Therefore, for ensuring its safe transportation for marketing purposes acetone is first filled in cylinders and thereafter compressed acetylene is filled into them. After the Acetylene is used by the user, the cylinder with major portion of acetone is returned back to the manufacturers of the dissolved Acetylene. When the cylinder is re-filled with acetylene, only a small quantity of acetone is added to make up for the loss of acetone. Thus acetone is used as solvent a number of times. CEGAT has also held in Collector of Central Excise Indore v. Rishi Gases Pvt. Ltd. that Acetone should be regarded as an input for the manufacture of Acetylene. 3. In view of the above, it has been decided that Modvat credit could be allowed on acetone which is used for storing acetylene gas and the credit thereon can be used towards payment of duty on dissolving acetylene.