Modvat - Allowing credit of duty paid on inputs purchased from Small Scale Sector - Regarding - Central Excise - B.22/32/86-TRU

Modvat - Allowing credit of duty paid on inputs purchased from Small Scale Sector - Regarding F. No. B.22/32/86-TRU Dated 10-9-1986 Government of India Ministry of Finance (Department of Revenue) New Delhi Subject : Modvat - Allowing credit of duty paid on inputs purchased from Small Scale Sector - Regarding. The undersigned is directed to invite a reference to Ministry's letter of even number dated the 16th July, 1986 in which the procedures for calculating the credit of duty paid on inputs purchased from Small Scale Sector was prescribed. 2. In this context several references have been received from the field formations pointing out that these clarifications may not be consistent with the provisions of Rule 57B read with Notification No. 175/86 under which it has been provided that the credit of duty in respect of purchases from the small scale sector should be calculated at the rate that would have been payable but for the notification No. 175/86. 3. The matter has been re-examined in the Board. It is hereby clarified that the instructions issued are in conformity with Rule 57B read with Para 5 of Notification 175/86. The calculations shown in the letter under reference calculate the quantum of duty credit by applying the rate that is leviable but for Notification 175/86. But it is not the rate but the actual quantum of duty payable at that rate that is to be given as credit. This is in consonance with Section 4 of the Central Excises and Salt Act, 1944 since the wholesale price inclusive of duty remains unchanged. It is thus reiterated that for determining the quantum of duty given as credit in respect of inputs purchased from this small scale sector, the instructions contained in Board's letter dated the 16th July, 1986 should continue to be followed.