Modvat Credit Denied for Battery Cells in Quartz Clocks; Deemed Non-Essential for Manufacturing Process. Immediate Compliance Required.

The circular from the Central Board of Excise & Customs addresses the inadmissibility of Modvat credit for dry battery cells used in quartz wall clocks and timepieces. The Board concluded that battery cells are not essential in the manufacturing process but are merely operational accessories. Consequently, Modvat credit for duty paid on these battery cells is not permissible. Any existing practices allowing such credit should be discontinued immediately, and any credits previously granted should be recovered. Relevant trade and field formations are to be informed accordingly.

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