Subject : Deemed Credit to ship-breakers, denial of-instructions regarding

    It has been brought to the notice of the Board that scrap generated by breaking of a ship etc. is not being allowed deemed modvat credit by certain field informations.  The ship-breakers have also represented to the Board. The matter has been examined and the following instructions are issued :

    RUle 57G of the Central Excise Rules 1944, stipulates that the Government has the power to allow deemed credit having regard to the period that has elapsed since the duty of excise was imposed on any inputs, the position of deemed and supply of the said inputs in the country and any other relevant considerations. If no duty is imposed on any of the inputs then the provisions of Rule 57-G can not be invoked to allow deemed credit. Since the scrap cleared by the ship-breakers have not suffered the duty, it would not be correct to allow deemed credit on such scrap.