Modvat Procedure - Clarification regarding - Central Excise - 26/88

Modvat Procedure - Clarification regarding Circular No. 26/88 Dated 21-6-1988 [From F. No. 267/87/88-CX.8] Government of India Ministry of Finance (Department of Revenue) Central Board of Excise and customs, New Delhi Subject : Modvat Procedure - Clarification regarding. I am directed to say that doubts have been raised as to (i) whether Modvat credit taken on parts meant to be used in Black White T.V.s could be utilised towards payment of duty on colour T.V.s. and (ii) how the additional duty of customs (CVD) paid on the parts covered by customs heading No. 98.06 can be utilised towards payment of duty on final products in the absence of a corresponding heading under CE Tariff Act, 1985. The matter has been examined by the Board. Modvat rules provide that the credit taken on inputs can be utilised towards payment of duty of the final products in the manufacture of which, such inputs are intended to be used. Therefore it has been decided that Modvat credit taken on the parts meant to be used in the Black White TV cannot be utilised towards payment of duty on the colour T.Vs. As regards problem No. (ii), Modvat credit can be granted to the parts covered by customs tariff heading 98.06 by appropriately classifying the same under a heading of the CE Tariff before assessing the Bill of entry. This disposes of Collector of Central Excise, Calcutta-I's reference No. IV (4) 2-CE-1/88/16340, dated 8-2-1988. The above instructions may be brought to the notice of the field formations. Receipt of this letter may please be acknowledged.