Circular No. 185/19/96-CX
dated 19/3/96
F.No. 267/71/95-CX-8

Government of India

Ministry of Finance

(Department of Revenue), New Delhi

Subject : MODVAT Credit on capital goods to 100% EOUs seeking premature debonding.

1. Representation have been received from 100% EOUs seeking premature debonding and converting to Domestic Tariff Area Units regarding availment of Credit on countervailing duty paid by them at the time of debonding.

2. It has been  reported that on premature debonding the concerned units pay the appropriate duties of Customs & Central Excise on capital goods purchased free of duty (indigenous and imported) at the time of initial setting up of the EOU. Hence, it has been requested that the CVD Component of the import duty so discharged on such capital goods should be allowed to be modvatted when it starts production as a domestic unit.

3. The matter has been examined by the Board. I am directed to say that MODVAT Credit can be allowed to the extent CVD paid on imported capital goods or procured from domestic market.

(Mallika Arya)
Under Secretary to the Government of India

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