Modvat Credit on Textile Fabrics

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....3. The salient features of the modifications are as follows: (i) The cutoff point for the confessional rates of AED (ST) and BED, both at 5% applicable to 100% cotton fabrics has been increased to Rs. 30/sqm. (ii) The rate of BED in respect of other fabrics has been increased from 10% to 12% but that of  AED reduced from 10% to 8%. (iii) "Composite mills" will function under conventional Modvat Scheme, except for fabrics processed on job-basis. 4. The implications in respect of composite mill as well as independent processor are discussed below:- COMPOSITE MILL (i)    The definition of a composite mill has been modified so as to include only such composite mills who are engaged in the processe....

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....mills may also undertake processing of fabrics on job work basis, provision has been made to provide for deemed credit when such fabrics are cleared after processing. It may be noted that for fabrics processed by a composite mill on job-basis, the deemed credit would be at the rate of 40% or 60%.  (viii) In case of a composite mill, the credit of duty pad on inputs lying in stock on the transitional day will be available as per the provision of the rule 57H. This credit has been provided for on all inputs including yarn lying in stock as such or contained in grey fabrics lying in stock or contained in processed fabrics lying in stock or are used in the manufacture of processed fabrics which are cleared on or after 4th September....

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....sp;                                       BED Deemed Credit as a % of BED    AED         1.    100% cotton fabric upto a value    5%    40%   5%   2.    100% cotton fabric of value  exceeding Rs. 30/ sqm. 12%    40%   8%   3. All other fabrics 12% 60% 8% 4.3 Deemed credit is in lieu of duty paid on only fibres and yarns. The credit of duty paid on dyes, chemicals, cons....

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....D    Deemed Credit as a% of BED AED     1.      100% cotton fabric upto a value of Rs. 30/sqm.    5%      50%     5%     2.      100% cotton fabric of value   exceeding Rs. 30/sqm.    12%      50%     8%     3. All other fabrics  12% 70% 8% 4.5 Deemed credit is in lieu of duty paid on fibres, yarns, dyes, chemicals consumables and packaging materials. 5.0 Other Changes: 5.1 It is important to note that a provisions has been made to the effect that deemed credit shall not apply to fabrics....

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.... rates from 20% to 10% in respect of various fabrics as proposed in the Finance Bill, 1996 has not yet become effective. The increased rate of BED as well as reduction in AED rates have been prescribed by amending notification Nos. 8/96-CE, 9/96-CE, 16/96-CE and 17/96-CE suitably. Necessary amendment will be carried out in the Finance Bill through official amendment. 5.4 The restriction of exemption for minor processes to only such units as do not have the facility of bleaching, dyeing or printing continues. In case a processor having facilities for bleaching, dyeing or printing also undertakes the minor processes, he will be required to pay duty at the above mentioned rates on the full value of the fabrics. 5.5 The revised ....