Ministry of Finance Clarifies Modvat Credit Eligibility for Duty-Paid Inputs on Exempted Goods.

The circular from the Ministry of Finance addresses the issue of Modvat credit for goods that are fully exempted from duty. It clarifies that if an assessee opts to pay duty on such exempted goods instead of availing the exemption, they should not be denied Modvat credit for these duty-paid inputs when used in manufacturing final products. The Board has decided that the choice to pay duty rests with the assessee, and field formations should be instructed accordingly. A notice should be issued to inform the trade, and acknowledgment of the circular's receipt is requested.

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