Central Excise - Modvat - Payment of excise duty on Finished products through P.L.A. Account only - Question regarding - Central Excise - B. 21/51/87-TRU

Central Excise - Modvat - Payment of excise duty on Finished products through P.L.A. Account only - Question regarding F. No. B. 21/51/87-TRU Dated 20-1-1988 Government of India Ministry of Finance (Department of Revenue) New Delhi Subject : Central Excise - Modvat - Payment of excise duty on Finished products through P.L.A. Account only - Question regarding. I am directed to state that doubts have been raised as to whether for purposes of discharging excise duty liability of finished product covered by the Modvat scheme, an assessee has to pay the same out of his PLA account only, or he could also utilise Modvat credit in RG 23A account for discharging the duty liability. 2. The matter has been examined by the Board. It may be recalled that prior to the introduction of Modvat Scheme, there was the proforma credit scheme in terms of rule 56A of the Central Excise Rules, 1944. In that context, the Board had issued instructions contained in F. No. 8/1/70-CX.6, (Circular No. 6/70-CX.6), dated 15-5-1970 wherein it was clarified that payment of duty through a debit entry in the proforma credit account is to be treated as payment of duty in cash for the purpose of admissibility of rebate of duty under rule 12 of the Central Excise Rules, 1944. The Board had, on another occasion, clarified to Collector of Central Excise, Bombay-I under letter F. No. 202/51/81-CX.6, dated 19-4-1982, in the context of the notification No. 201/79-C.E., dated 4-6-1979, that it was immaterial whether duty on inputs was paid through RG 23 or P.L.A. and in both the cases it is to be taken that duty on inputs has been paid and credit of such duty would be available under notification No. 201/79-C.E. 3. In the Modvat Scheme, rule 57A provides for allowing credit of any duty of excise or CVD paid on the inputs for utilising the credit so allowed towards payment of duty on the final products. Rule 57F(3) further stipulates that credit of specified duty allowed in respect of any inputs may be utilised towards payment of excise duty on any of the final products. The Modvat Scheme does not draw a distinction between payment of duty through PLA and payment through Modvat credit RG 23A account for discharging the duty liability on final product. Accordingly, it has been decided by the Board that the practice of leaving the option to an assessee to discharge duty liability either through PLA account or through Modvat credit account should be allowed to continue. 4. Lower field formations may be instructed suitably. 5. Receipt of these instructions may please be acknowledged.