Government of India
Ministry of Finance
Department of Revenue, New Delhi
Subject: Procedural relaxation regarding MODVAT Credit.
Representations have been received from the manufacturers that some of their inputs on which modvat credit is taken by them have to be initially sent to another manufacture (job workers) for a part of process and then return the same to the manufacturers. For this purpose, the manufacturers clear the goods under Rule 57F(1) (ii) on payment of duty. The job workers take the modvat credit and clear the products manufactured out of said input on payment of appropriate amount of duty to the manufacturer who had supplied the inputs to said job workers. It is represented that this procedure entails avoidable expenditure on account of double transportation & material handling, besides loss of time.
2. It has been suggested that to get over the difficulties inherent in the existing procedure, the inputs could move directly from the supplier to the job workers without being routed through them. the inputs could be consigned to the job workers directly on account of such manufacturers as in the case of registered dealers.
3. The matter has been examined. Board had earlier issued the Circular No. 96/7/95-CX dated 13.2.95 clarifying that where a registered person places an order on a manufacturer for supply and delivery of goods directly to a consumer unit and the goods are accordingly transported from the manufacturer”s premises without being brought to the registered person, modvat could be availed by the end user in such cases on the depilate copy of manufacturer”s premises without being brought to the registered person, modvat could be availed by the end user in such cases on the duplicate copy of manufacturer”s invoice issued under Rule 52A. This Invoice under Rule 52A will however contain, in addition to the prescribed details including the consignee”s name and address mentioned therein, the registered person”s name and address, on account of whose instructions, the goods have been dispatched. The consignee it this case will be the end user (job worker).
4. It has been decided that the aforesaid circular shall apply Mutatis/ Mutandis to those cases also where inputs are supplied to a job worker under the instructions of another manufacturer. In such a situation the consignee will be the job worker and Invoice under Rules 52A, in addition to the prescribed details including the consignee”s name and address will also bear the name and address of manufacturer on whose instruction the goods have been so dispatched. The duplicate copy of the manufacturer”s invoice under Rule 52A will serve as a cover for transport and for availment of Modvat by the input user (job worker).