Circular No. 167/1/96-CX dated 3/1/96.
Subject: Availment of Modvat Credit on capital goods - amendment of Rule 57Q
Notification No. 1/96-CE (N.T.)-regarding
Please find enclosed a copy of the Notification No. 1/96*-CE (NT) dated
1.1.96 which has been issued to insert a new Clause (ii) in sub-rule (2) of rule 57Q
of the Central excise Rules, 1944.
2. The amendment has been made so as to provide that in respect of capital goods,
other than those which are covered under sub-clause (b) of clause (1) or items (ix)
and (x) of sub-clause (d) of clause (1) of Explanation to sub-rule (1) of rule 57Q,
and which are" received in the factory of a manufacturer of final products on or after
1.1.1996, the credit shall not be taken in RG 23C, Part II until such capital goods
have been installed or used in the factory of the manufacturer. In other words, the
entry in RG 23C, Part II shall be made by the manufacturer only after such capital
goods have been installed or have been put to use in his factory. However, entry in
Part I of the RG 23C can be made when the capital goods are received in the factory of
the manufacturer.
3. If may be noted that in sub-rule (2) (ii), the words ""installed or, as the case may
be, used in the manufacture of excisable goods"" have been used. Accordingly, where the
capital goods are of such a nature that they are not used for the manufacture of
excisable goods but are used for other purposes in the factory, the credit can be
taken on any date after such goods are installed in the factory. This would apply to
capital goods like weigh bridges, generating sets, etc. However, for those capital
goods like machines and machinery which are used for manufacture of any intermediate
or final product, the credit cannot be taken until such machines or machinery have
been installed or actually used for such purposes.
4. It has been further provided that a certificate about the use of capital goods may
be given by the manufacturer or by an officer designated by him for this purpose." The
certificate maybe given by the manufacturer or by any other officer, as may be,
designated by the manufacturer (like the Production Manager) for this purpose. Such
certificates should normally be accepted. However, on a selective basis, the central
excise officers may satisfy themselves that the credit has not been taken unless a
particular capital good has .actually been installed or used by .the manufacturer.
Actual use of the capital goods intended to produce excisable goods will normally be
reflected in the statutory production records.
5. Suitable trade notice may .kindly be issued urgently bringing the above changes to
the notice of the trade and the departmental officers may also be advised suitably.
Sd/-
T.R.Rustagi
F.No. 330/2/95-TRU
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