Government of India
Ministry of Finance
Department of Revenue, New Delhi
Subject: Assessment of “UNO” Model cars manufactured by M/s. Premier Automobiles Ltd. – reference from Commissioner of Central Excise, Mumbai – II – Regarding
It has been brought to the notice of the Board that Central Excise Authorities are not allowing MODVAT credit of the entire CVD paid on the car kit imported in CKD/SKD condition assessed to duty as a complete car at the rate of 40% by the Customs Authorities. It has been further reported that some Commissionerates are restricting the MODVAT credit on CKD car packs to the tune of 15% whereas in other Commissionerates, MODVAT credit is being denied altogether.
2. Matter has been examined in the Board. I am directed to say that the goods have been assessed to duty by the Customs Authorities as per the rate applicable to the complete car when imported in CKD/ SKD condition into a car amounts to manufacture as per the Note 6 of Section XVII of the Central Excise Tariff Act, 1985. Hence, the CKD/SKD car packs are inputs for the fully assembled car and accordingly, MODVAT credit of entire CVD paid is admissible on such car packs imported in CKD/SKD condition. The Central Excise Authorities have no power to restrict the MODVAT credit of the entire duty paid in this case as per the MODVAT Rules.