Circular No. 275/109/96- Central Excise

dated 26/11/96
F.No. 267/96/96-CX.8

Government  of India

Ministry of Finance

Department of Revenue

Central Board of Excise & Customs

Subject: Modvat Scheme – certain clarification reg.

I am directed to invite attention to the various points raised with regard to availing of credit under the Modvat Scheme, documentation and procedure to be followed. In this connection the points raised by trade and the Commissioners and the Clarification thereof are as follows:

Point – I

Whether depots/ consignment agents of a manufacturer are required to give certificate stipulated under notification No. 27/96-CE (NT) dated 31.08.1996.


There is no need for giving certificate in case of invoices issued by depots/ consignment agents of manufacturer.

Point – 2

Whether re-credit under Rule 57 F(3A) could be taken in PLA account where debit has been made from the said accounts.


A manufacturer is allowed to take credit in PLA account only on the strength of either TR-6 challan or on a specific order given by the proper officer in cases like refund/ rebate etc. As such on return of the processed goods from the job worker, recredit can be taken of the equivalent amount in RG-23A Part- II account only, irrespective of the fact whether at the time of clearance of inputs/ partially processed inputs, the amount was debited through PLA. Board therefore reiterates the clarifications already given vide TRU Circular F.No. B-42/ 1/ 96-TRU dated 31.8.96.

Point – 3

Whether the value of inputs or the partially processed inputs for the purpose of debiting an amount equal to 10% of the value of such inputs or partially processed inputs under Rule 57F (3A)(i) should also include the value of inputs used during such processing on which on credit has been availed.


If some inputs on which no credit has been taken are also cleared along with those inputs on which credit has been taken, there is no need of taking into consideration the value of inputs which are exempt or on which no credit has been taken. However, in the case of partially processed inputs it would be appropriate to debit the amount equal to 10% of the total value of partially processed inputs cleared for job work even if such partially processed inputs contain some inputs on which no credit has been taken.

Point – 4

Whether the 6 months period for the purpose of taking credit shall be computed from the date of payment of duty in case of imported inputs or the date of filing bill of entry.


The period of 6 months should be computed from the date of payment of duty.

Point – 5

What should be the date for computing 6 months period to avail the credit under Rule 57 G where-

(i)  Transporter”s copy of the invoice is lost and the credit in permitted after a period of 6 months.

(ii)  Credit is taken under rule 57E of duty paid on a date after 6 months of duty paid originally.


(i) & (ii). 6 months period may not apply in such cases as restriction of 6 months is applicable only to those cases where the assessee himself takes/ avails the credit. It would be however appropriate to take credit in such cases within 6 months of the date of permission given by the Asstt. commissioner on the strength of original copy (where duplicate copy is lost). Similarly credit can be taken within 6 months of the date of issue certificate under Rule 57E by the Range Superintendent.

Point – 6

a request has been made to provide a procedure where the inputs are imported in the name of manufacturer who instead of availing the credit, transfers such inputs to his sister unit.


The procedure prescribed by the Board under circular No. 179/ 13/ 96-CX dated 29.2.96, in case of the bill of entry in the name of registered office/ head office can be followed mutatis- mutandis in these cases also.

(I.P. Lal)
Deputy Secretary to the Government of India

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