C.E. - Sending out packing material to job workers for conversion under Rules 57F(2) - Admissibility of Modvat thereon - Clarification regarding - Central Excise - 267/129/87-CX.8

C.E. - Sending out packing material to job workers for conversion under Rules 57F(2) - Admissibility of Modvat thereon - Clarification regarding F.No. 267/129/87-CX.8 Dated 3-3-1988 Government of India Ministry of Finance (Department of Revenue) Central Board of Excise Customs, New Delhi Subject : C.E. - Sending out packing material to job workers for conversion under Rules 57F(2) - Admissibility of Modvat thereon - Clarification regarding. A doubt has arisen as to whether Modvat credit would be admissible on the card board which is received by the manufacturer and subsequently sent to job workers under Rule 57F(2), for converting the same into boxes which are finally used as packing material for steel files falling under Chapter 82. (i.e. whether credit would be available on the raw materials used for manufacturing of packing material). 2. The matter has been examined by the Board. It has been decided that Modvat credit on packaging material would be admissible only if the packing material is brought into the manufacturers' premises in a ready to use condition. In other words, Modvat credit would not be admissible on raw materials for the packaging material. If there are other similar cases, where the manufacturer is bringing raw material into his factory and then sending it to the job worker for conversion of such raw material into packing material before it is finally used for packing the finished products and are availing of Modvat credit on such raw material, the practice should be stopped forthwith and a suitable action taken for the recovery of wrong availment of Modvat credit on this account. 3. The field formations may be suitably informed. 4. Please acknowledge the receipt of this letter.