Modvat - Changes - Regarding - Central Excise - B-21/4/87-TRU

Modvat - Changes - Regarding F. No. B-21/4/87-TRU Dated 15-4-1987 Government of India Ministry of Finance (Department of Revenue) New Delhi Subject: Modvat - Changes - Regarding. Certain changes have been effected in Rule 56A and the Modvat rules through issue of Notification No. 117/87-C.E., dated the 15th April, 1987. The salient features of these changes are indicated below. 1. Simultaneous availing of Rules 56A and 57A. By virtue of sub-rule (9) of Rule 56A, a manufacturer who is availing of Modvat cannot avail of credit under Rule 56A in respect of any product irrespective of whether such product is covered under Modvat or not. Sub-rule (9) of rule 56A has been suitably amended so as to provide that in respect of the same inputs, credit under Rules 56A and 57A cannot be simultaneously availed of. In other words, a manufacturer availing of Modvat can avail of proforma credit in respect of inputs not covered under Modvat but covered under Rule 56A. 2. Adjustment of duty credit (Rule 57E) In the 1987 Budget, it was provided that if as a result of change in classification of inputs on the basis of instructions issued by the Board, additional duty is demanded from the manufacturer of inputs, the user will be allowed the benefit of this additional duty. This rule is being further liberalised so as to provide that such adjustment would be allowed whenever the input duty is varied for whatever reason. 3. Rule 57G Rule 57G is being amended so as to provide that for taking Modvat credit, the inputs shall be received under cover of prescribed duty paying documents. There may be instances where on account of movement by rail etc. the duty paying documents are received subsequently. In such cases, credit can be allowed only after receipt of the duty paying documents, but the inputs may be taken into use immediately after it is received, after making suitable entry in the RG 23A account. 4. Transitional provisions (Rule 57H) In 1987 Budget, rule 57H was amended so as to allow a manufacturer, inter alia, to take credit of duty paid on the inputs lying in stock as well as the inputs received on or after 1-3-1987. It is now being clarified that the credit should be allowed in respect of those inputs which are either lying in stock at the time of acknowledgement or received after filing the declaration. No credit will be allowed in respect of inputs which are used in the manufacture of exempted excisable goods. 5. Receipt of this letter may please be acknowledged. 6. Hindi version of this letter will follow in due course.