Modvat on capital goods acquired on lease, hire-purchase or loan agreement - Conditions and restrictions - 27/94 - Central Excise - Non Tariff

Modvat on capital goods acquired on lease, hire-purchase or loan agreement - Conditions and restrictions

Notification No. 27/94-C.E. (N.T.)

Dated 17-6-1994

In exercise of the powers conferred by sub-rule (3) of rule 57R of the Central Excise Rules, 1944 (hereinafter referred to as the said Rules), the Central Government hereby specifies the following conditions and restrictions that shall be observed by a manufacturer availing credit of the specified duty paid on the capital goods when such capital goods are acquired on lease, hire-purchase or loan agreement, from a financial company :-

(i) The manufacturer shall file a declaration before the Assistant Collector of Central Excise as required under rule 57T of the said Rules;

(ii) When the manufacturer availing credit of the specified duty paid on capital goods, has entered into a financial arrangement for financing the cost of such capital goods excluding the specified duty, the manufacturer shall produce a copy of the invoice as referred to in rule 57T of the said Rules, evidencing payment of specified duty along with a copy of the agreement with the financial company;

(iii) When the manufacturer availing credit of the specified duty paid on capital goods has entered into a financial arrangement to finance the cost of such capital goods including the specified duty, the manufacturer shall produce a certificate from the financial company that duty specified on such capital goods has been paid by the said manufacturer to such financial company, prior to the first lease rental instalment or the first hire-purchase instalment or the first loan instalment of repayment of loan along with a copy of the agreement :

Provided that no credit of the specified duty paid on such capital goods shall be allowed unless such specified duty represents the whole of duty payable on such capital goods;

(iv) The manufacturer and the financial companies shall not claim depreciation under the Income-tax laws on that part of the value of capital goods which represents the amount of specified duty paid on such capital goods;

(v) The procedure provided under section "AAA. CREDIT OF DUTY PAID ON CAPITAL GOODS USED BY THE MANUFACTURER OF SPECIFIED GOODS" of Chapter V of the said Rules, is to be followed;

(vi) The relevant documents required for the purpose of availing credit of the specified duty paid on such capital goods under rule 57T of the said Rules shall bear the name of the manufacturer along with that of the financial company.