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TMI BlogModvat Credit on Textile FabricsX X X X Extracts X X X X X X X X Extracts X X X X ..... alient features of the modifications are as follows: (i) The cutoff point for the confessional rates of AED (ST) and BED, both at 5% applicable to 100% cotton fabrics has been increased to Rs. 30/sqm. (ii) The rate of BED in respect of other fabrics has been increased from 10% to 12% but that of AED reduced from 10% to 8%. (iii) "Composite mills" will function under conventional Modvat Scheme, except for fabrics processed on job-basis. 4. The implications in respect of composite mill as well as independent processor are discussed below:- COMPOSITE MILL (i) The definition of a composite mill has been modified so as to include only such composite mills who are engaged in the processes of spinning of yarn from fibres (mills eng ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovide for deemed credit when such fabrics are cleared after processing. It may be noted that for fabrics processed by a composite mill on job-basis, the deemed credit would be at the rate of 40% or 60%. (viii) In case of a composite mill, the credit of duty pad on inputs lying in stock on the transitional day will be available as per the provision of the rule 57H. This credit has been provided for on all inputs including yarn lying in stock as such or contained in grey fabrics lying in stock or contained in processed fabrics lying in stock or are used in the manufacture of processed fabrics which are cleared on or after 4th September, 1996. In respect of such stocks of grey fabrics and processed fabrics received on job work, provision ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e received for further processing the credit of actual duty paid on such fabrics will be available. Such partially processed fabrics, when cleared finally will be required to pay appropriate duty without any deemed credit for fibres and yarns. 4.4 INDEPENDENT PROCESSORS The rate of deemed credit in case of fabrics other than 100% cotton fabrics, has been in creased from 50% to 70% which is in lieu of duty paid on inputs by such processors except that on capital goods. In other words independent processors will get credit of duty paid on capital goods on actual basis. For all other inputs no actual credit will be permitted. In the case of cotton fabrics in deemed credit at 50% is also inclusive of duty paid on dyes, chemicals etc. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cturer who avails any credit of duty under any notification issued under sub-rule (1) or rule 57A of the said rules except the following cases:- (i) in case of a composite mill, who is eligible for credit of actual duty paid on various inputs as well as credit on deemed basis in respect of fabrics processed on job work basis. (ii) in case the inputs are partially processed fabrics and are cleared after final processing on payment of duty. In this case, the credit of actual duty paid earlier on partially processed fabrics will be available under sub-rule (1) of rule 57A. (iii) in case of capital goods where the credit of actual duty paid will be available under sub rule (1) of rule 57A. 5.3 The reduction in BED rates from 20% to 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les 12. In cases a manufacturer is not able to so utilise the deemed credit earned on export clearances, he will be eligible to claim refund subject to such procedure to be prescribed in this regard. Suitable procedure for grant of refund in such cases will be notified soon. 6.0 The Commissioner are requested to kindly go through these changes carefully and issue suitable instructions to field formations wherever necessary. They are also requested to issue Trade Notices immediately so that the trade and industry are made aware to these changes. 7.0 Any problems or difficulties in the implementation of these changes may be brought to the notice of the undersigned by Fax or telex. Sd/- (T.R. Rustagi) Commissioner (TRU) - Cir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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