Advantages of MODVAT


Advantages of MODVAT


The Government Exchequer has benefited after the introduction of MODVAT scheme since there is increase in revenue as more and more manufactures are beginning to pay excise duty so as to make the receivers of such duty paid inputs available MODVAT facility.


The industry also enjoys the advantages of the concept by availing MODVAT facility which effectively reduces the purchase price of the inputs.


On the aspect of assessable value of final products vis-à-vis availing of MODVAT facility on inputs it was clearly spelt out by the tribunal in the case of collector of central exercise v. Incab industries that merely because MODVAT is being availed it cannot be insisted for reduction in the assessable value of final product even though MODVAT in fact reduces the cost of production. As the assessable value is determined in terms of selection 4 and MODVAT provisions are governed by rules [1990 (45) ELT 324 (TRI)].


It is very interesting to note that larger branch of the tribunal delivered judgment in the case of Dai Ichi Karkaria Ltd. V. Collector of central excise (1996-81-ELT-676-TRI) to declare that MODVAT credit availed in respect of input (and so also for capital goods ) is not addable to the assessable value. However the department has gone in appeal against this decision before Supreme Court which has been admitted.


Like it? Share with your friends!

BMS Team

We, at, believe in sharing knowledge and giving quality information to our BMS students. We are here to provide and update you with every details required by you BMSites! If you want to join us, please mail to [email protected]


Facebook comments:

Choose A Format
Personality quiz
Series of questions that intends to reveal something about the personality
Trivia quiz
Series of questions with right and wrong answers that intends to check knowledge
Voting to make decisions or determine opinions
Formatted Text with Embeds and Visuals
The Classic Internet Listicles
The Classic Internet Countdowns
Open List
Submit your own item and vote up for the best submission
Ranked List
Upvote or downvote to decide the best list item
Upload your own images to make custom memes
Youtube, Vimeo or Vine Embeds
Soundcloud or Mixcloud Embeds
Photo or GIF
GIF format