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of <h1>Modvat Scheme: Manufacturers Can't Switch to Full Exemption Mid-Year; Options Clarified for Small Scale Units.</h1> The circular addresses inquiries from Central Excise Collectors about small scale units opting in or out of the Modvat Scheme. It clarifies that a manufacturer who initially opts for Modvat cannot switch to full exemption within the same financial year. They can only opt out in the next financial year if eligible. Conversely, a unit initially availing full exemption can choose to pay excise duty and avail Modvat before reaching exemption limits, without reopening previous assessments. The guidance is based on notification No. 175/86-C.E. and the legal framework governing the Modvat scheme.
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