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TMI BlogClarifications regarding restriction of modvat credit to 95% of input dutyX X X X Extracts X X X X X X X X Extracts X X X X ..... ntral Excise Rules, 1944 inputs can also be removed as such, on payment of duty equal to the credit availed in respect of such inputs when they were received in the factory. In such cases, if the inputs were received on or after 2nd day of June, 1998, the "credit taken" would be equal to 95% of the originally paid. The inputs could be cleared as such on payment of duty equal" to the credit taken, i.e.95% of the duty originally paid. The consignee of such inputs would in turn be eligible to take credit of 95% of the duty paid under Rule 57 F(3). To illustrate, assume that a factory 'A' clears an input on payment of duty equal to Rs 100, and sells to 'B'. in this case 'B' is allowed to take credit of Rs. 95. Assume that 'B' sells this input a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns under Rule 57F(4), 57F(6) and 57F(7) the restriction of 95% shall not apply. c) Applicability of restriction of 95% on intra-unit transfer of a company The afore-mentioned notifications (Nos. 14/98-CE(NT) and 21/98-CE(NT), both dated 2.6.98) restrict MODVAT credit to 95% of the duty paid on inputs used in the manufacture of final products. It is noteworthy that this restriction is not dependent on the fact, whether inputs are received by one unit of a company from the other sister unit of the same company or are received from some independent unit. The Central Excise Law also does not distinguish between an independent unit and different units of same company. The application of the Excise Law is related to each assessee i.e. to e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese inputs. If the inputs had been received in the factory of the manufacturer on or before 1.6.98, then even if he has filed the declaration later in terms of Rule 57G(9) he shall be entitled to credit to the extent of the duty paid on the inputs, and the restriction of 95% shall not apply. The restriction of 95% would apply only in case of inputs received in the factory of the manufacturer on or after 2nd June, 1998. Rule 57H relates to transitional provisions to cover the availment of credit by a manufacturer of final products during the intervening period between his filing the declaration under Rule 57G(1) and getting the dated acknowledgment for the same. Here also, if the inputs had been received in the factory of the manufacturer o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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