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Circular No. 232/66/96-CX
dated 25/7/96
 
F.No. 267/79/96-CX.8
 
Government of India
Ministry of Finance, Department of Revenue
Central Board of Excise & Customs, New Delhi
Subejct : Reversal of Modvat credit availed in inputs used in the manufacture of exempted final products
 
        Consolidated maintenance of RG 23 A part -II is permitted where the inputs are used in the manufacture of exempted and dutiable final products vide Board's Circular No. 33/33/94-CX dated 04.05.1994. However, in such cases a statement has to be submitted by the assessee in the prescribed proforma showing particulars of reversal of Modvat credit availed on inputs going into the manufacture of exempted final products.

2.    It has been brought to the notice of the Board that the aforesaid reversal is taking place only at the end of the month and not no prorata basis. The said practice is against the spirit of Rule 57G of the Central Excise Rules, 1944.

3.    Keeping in view of the decision of the Hon'ble Supreme Court in the case of M/s Chandrapur Magnet Wires Pvt. Ltd. v. CCE, Nagpur (Civil Appeal No. 7275 of 1995 dated 12.12.1995), it has been decided by the Board that credit of the duty paid on common inputs admissible when used in the manufacture of the final product (exempted and dutiable) provided the said credit of duty paid on inputs going into the exempted category of the final product is debited in the RG 23 A Part -II account before the removal of exempted final product on actual or prorate (estimated) basis.

4.    However, the assessee will be required to submit a statement in the proforma annexed herewith showing reversal reversal particulars to the jurisdictional Central Excise Officer at the end of the month. The Board's instructions of 33/33/94-CX dated 04.05.1994 are modified to this effect. All pervious Circulars which are contrary to the present circulars stand superceeded.

5.    Trade and field formations may be informed suitable.

Sd/-
(Maillika Arya)
Under Secretary to the Govt., of India
Statement to be submitted by the assessee who maintain in consolidated
RG - 23A Part -II Register for inputs used in the manufacture of exempted
and dutiable final products.
 
(1) Name of the common inputs
(2) Name of the final product
(3) 
 		 Quantity of common input used  
in the manufacture of final product
(4) Total Final product manufactured
(5) Credit involved
(6) 
 
 		 Total Quantity of final products 
cleared on payment of duty 
(manufactured out of common input)
(7) 
 		 amount of credit utilised for 
payment of duty
(8) 
 
 		 Total quantity of final product 
cleared without payment of duty 
(manufactured out of common input)
(9) 
 		 Total credit reversed (Col. No) 
5-Col. No.7)
(10) 
 
 
 
 		 Prorate Modvat Reversal details of               (i)          dated of clearance of exempted final product  
inputs used in exempted final                                           
product during the month                            (ii)         Quantity cleared 
                                                                (iii)        Amount of credit reversed 
                                                                (iv)         PLA / RG - 23 A part - II Entry No.
Note :
    The above statement has to be prepared only in respect of those inputs which have been used for manufacture of final products where consolidated RG 23 A Part - II is being maintained or are utilised in the manufacture of exempted as well as dutiable final products.