Major differences between Cenvat and Modvat are as follows:
- The most welcome change is the scrapping of Modvat declaration. It was creating procedural hurdles without any benefit.
- Statutory records i.e. RG23A and RG23C have been scrapped. Of course, the private records have to any way maintained, but assessee can now maintain the records on computer or in a form convenient to him.
- Waste & scrap is treated as any other ‘final product’ in Cenvat. Hence, all provisions in respect of waste & scrap have been removed in Cenvat rules.
- Inputs & capital goods can be sent to for job work under Cenvat without payment of 10% duty. It can be send under assessee’s own challan & no statutory records have been prescribed.
- Specific provision has been made permitting removal of moulds & dies to a job worker to manufacture goods on behalf of assessee according to his specifications.
- Uniform time limits of 180 days have been specified for bringing back the inputs & capital goods after job work. It is also specified that if the inputs/capital goods do not come back within 180 days, assessee should reverse the Central credit. However, he can himself take credit if the inputs/capital goods come back later.
- Distinction between ‘original’ & ‘duplicate’ copy of Invoice has been removed. Cenvat credit can be taken under any copy of Invoice.
- Time limit of 6 months of validity of duty paying document for availing Cenvat credit has been removed.
- Earlier rule 57T(2) provided that assessee cannot claim depreciation u/s 32 of Income Tax Act or as revenue expenditure in respect of excise duty portion of the capital goods. The words ‘as revenue expenditure’ are missing from, corresponding new rule 57AC (4).
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