Circular No.108/19/95- Central Excise
Subject : Reversal of Modvat credit by Exporters
I am directed to refer to the minutes of the Principal Collectors Conference under para 3 of the DEEC scheme circulated vide Board”s letter F.No. 267/9/95-CX-8 dated 13.2.95.
2. Some doubts have been raised whether the expression “the exporters can be permitted to reverse the credit taken in respect of inputs used in the exported finished product with reference to the actual amount of duty credit taken, and if the quantification of input credit is not possible reversal of credit should be based on the input output norms approved by the Commerce Ministry” implies that the Department should ask/ direct the exporters to reverse input credit taken on the export goods and that we need not thereafter taken any further action.
3. In the above connection, it is clarified that the aforesaid observations were made to cover the situations wherein if the exporters after having availed credit themselves reverse the credits, then we may not object to the same. Similarly, if the amounts of input credit availed are not known the Conference was of the view that reversal of credit can be based on the input-output norms approved by the Commerce Ministry.
4. Aforesaid observations do not mean that Department in such cases is prohibited from taking any other action that is mandated under the law.
5. A separate record of reversal of Modvat credit in such cases made by exporters should be kept.
6. Further instructions in this regard will be issued the Customs wing of the C.B.E.C.
