Central Excise - Admissibility of Modvat benefit in respect of certain inputs - Regarding - Central Excise - B.22/32/87-TRU

Central Excise - Admissibility of Modvat benefit in respect of certain inputs - Regarding From F. No. B.22/32/87-TRU Dated 5-4-1988 Government of India Ministry of Finance (Department of Revenue) Central Board of Excise And Customs, New Delhi Subject : Central Excise - Admissibility of Modvat benefit in respect of certain inputs - Regarding. The under-signed is directed to invite a reference to the Board's letter of even No., dated the 23rd September, 1987, addressed to C.C.E. Coimbatore, with copies to all other Collectors, wherein it is viewed that in the case of admixing of thinners as diluents before spray-painting of component parts of automobiles, such thinners would not qualify for Modvat credit. Subsequently, the general question of admissibility of Modvat on thinners used in the paints was also raised. 2. The matter has been further examined by the Board in consultation with the Chief Chemist (CRCL). It is observed that, having regard to the scope of the expression "used in or in relation to the manufacture" of the final product appearing in Rule 57A of the Modvat Rules, and the nature of the role performed by thinners in paints, the Modvat credit of the duty paid on thinner should normally be available when used in the manufacture of paints. However, where such thinners are classifiable under Chapter 27 of the C.E.T. by virtue of their composition, no Modvat credit would be available. Past cases may be decided accordingly. 3. Kindly acknowledge receipt of this letter. 4. Hindi version of this letter will follow in due course.