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<h1>Modvat Credit Denied for Inputs in Manufacturing Exempt Cut Tyres and Tubes u/r 57C; Immediate Recovery Ordered.</h1> Doubts have arisen regarding the admissibility of Modvat credit on inputs used in manufacturing cut tyres and tubes, which are exempt under Notification No. 76/86-C.E. The Central Board of Excise & Customs, after consulting the Law Ministry, clarified that cut tyres and tubes are considered finished products, not waste or by-products. Therefore, under Rule 57C of the Central Excise Rules, 1944, Modvat credit is not permissible. The practice of allowing such credit should cease immediately, and any credit already availed should be recovered. These instructions should be communicated to relevant field formations.