5. Modvat Non-Availment Certification/Exemption

The Drawback General Rules lay down that no Modvat facility under Central Excise Rules, has been availed for any of the inputs used in the manufacture of the export product. But there are certain situations where no declaration/certification is required. Following guidelines regarding requirements/acceptance of certificate of non-availment of modvat facility have been laid down.

(i) In the case of goods exported under Bond or claim for rebate of Central Excise duty, an AR-4 Form duly certified, or a certificate from the concerned Suptd. Of Central Excise incharge of factory of production shall be produced to the Customs to establish that no Modvat facility has been availed for the goods being exported.

(ii) In respect of goods being exported without AR-4 Form, which are not unconditionally exempt from Central Excise duty or are dutiable, the manufacturer-exporters under Central Excise control shall produce a certificate twice a year (once in the beginning Quarter) from the Asstt. Commissioner of Central Excise in whose jurisdiction the factory of production is located to the effect that no Modvat credit has been availed on any of the inputs used in the manufacture of export products instead of producing such certificate for each and every shipment.

For any new commodity (other than those mentioned in the certificates) a fresh certificate should be obtained by the manufacturer-exporters regarding non-availment of Modvat credit in respect of inputs used in the new commodity.

(iii) (a) Where the export goods being exported by the exporter are unconditionally exempt from the Central Excise duty, a self-declaration of the exporter regarding non-availment of Modvat may be accepted. However, in suitable cases, wherever necessary, a certificate may be asked to be produced only once in a year.

(b) The Commissioner of Central Excise concerned shall also issue a Trader Notice listing the goods which are unconditionally exempt from Central Excise duty in respect of goods manufactured in his jurisdiction. The Customs officers while processing the drawback claims shall not insist on the production of a certificate regarding non-availment of Modvat where the export product figures in such lists of unconditionally exempt goods.

The Commissioners of Central Excise shall continuously monitor and update such lists of unconditionally exempt goods pertaining to their Commissionerates and endorse copies of such Trade Notices listing the unconditionally exempt goods to the Director General of Inspection and Director (Central Excise), CEEC for information and further necessary action, if any.

The DG (Inspection) may consolidate and suggest modification in such lists to the Board if any change in required during the financial year.

(iv) (a) Where the manufacture-exporter is outside the excise control, a self-declaration of the manufacturer-exporter regarding non-availment of Modvat facility may be accepted. However, in suitable cases, wherever necessary, a certificate may be accepted. However, in suitable cases, wherever necessary, a certificate may be asked to be produced only once in a year and it should not be insisted upon with every Shipping Bill.

(b) Where the manufacture-exporter is in the unorganized/cottage sectors, which are unregistered with the Central Excise, the certificate issued by the concerned Council/Association in respect of non-availment of Modvat credit by their member-exporters specifying the export product, name and address of the manufacturer clearly, may also be accepted.

(v) In the case of merchant-exporter(s) where the name and address, including the factory address of the supporting manufacturer (s) from whom the export goods have been procured, have been declared in the Shipping Bills, duly accompanied by a certificate issued in favour of the declared supporting manufacturer by Central Excise Supdt, incharge of the factory of the production to the effect that such manufacturer has not availed the Modvat on any of the inputs used in the manufacture of the export goods, in such cases the merchant exporters should not be asked to produce a separate certificate regarding non-availment of Modvat credit in his own favour.

(vi) In the case of merchant exporter who procures the export goods from the open market, the benefit of All Industry Rates of Duty Drawback shall be restricted to the Customs allocation only, if any. Export goods purchased from the market shall be treated as having availed the Modvat facility and are not entitled to the Central Excise allocation of the All Industry Rate of Drawback.

Declarations

Two separate declarations have been specified for non-availment of benefits under Central Excise. These are for:

(i) manufacturer-exporter

(ii) merchant-exporter

Their specimen are Annexures 1 and 2.

Handicraft Export

In terms of General Note to the Drawback Table, the exporters of handicrafts of brass/iron under the Duty Drawback Scheme are not required to produce a certificate regarding non-availment of MODVAT facility as Handicrafts are unconditionally exempted from Central Excise Duty.

The certificates in respect of Handicrafts made out of Brass/Iron issued either by the Develoment Commissioner. Handicrafts or by the Export Promotion Council for Handicrafts are acceptable for export of such articles.