query urgent

In India, an excise tax is levied on the manufacturer of goods when those goods leave the place of manufacture. Formerly called the Central Excise Duty, this tax is now known as the Central Value Added Tax (CENVAT). Manufacturers may offset duty paid on materials used in the manufacturing process by using that duty as a credit against excise tax through a process known as Central Value Added Tax Credit (CENVAT Credit). The offsetting process was formerly known as Modified Value Added Tax (MODVAT).

MODVAT was replaced by CENVAT w.e.f. 1.4.2000. Principally, there is no difference between CENVAT and earlier MODVAT.

MODVAT contained separate provisions for capital goods, while CENVAT rules combine provisions in respect of capital goods and inputs

MODVAT required submission of declarations in respect of details of inputs and capital goods. CENVAT does not require any such declaration.

MODVAT prescribed statutory registers RG23A and RG23C. Such statutory registers are not required under CENVAT, but records have to be maintained, which require all information as was required in those registers.

If inputs are cleared as such, MODVAT credit just had to be reversed, while in case of CENVAT, these have to be cleared at the rate and value applicable as on date of removal.

MODVAT contained separate provisions for waste and scrap. CENVAT rules consider waste and scrap as any other final product and make no separate provisions in respect thereof.

In MODVAT, inputs were required to be sent for job work on payment of 10% duty. This nuisance has been removed in CENVAT. Goods sent for job work under CENVAT has to be brought back in 180 days.

MODVAT could be availed only on 'duplicate copy of invoice'. CENVAT can be availed on any copy of invoice.

MODVAT contained provision that duty paying document will be valid only for 6 months. CENVAT does not contain any such restriction.

In MODVAT, credit on capital goods could be taken immediately, while in CENVAT, it has to be taken in two yearly installments of 50% each.