Graded Excise Structure In Alternative Modvat Scheme

The government yesterday notified the alternative scheme for small-scale units when they avail of modified value-added tax (modvat) benefits. A small-scale unit availing of modvat benefit will be required to pay excise duty at 60 per cent of the normal duty on clearances up to Rs 50 lakh in a financial year. For the next clearance worth Rs 50 lakh, the unit will have to pay duty at 80 per cent of the normal duty. On clearances beyond Rs 1 crore, it will have to pay duty at the normal rate.

A small-scale unit can avail of The alternative scheme will be applicable in the current year too. However, the clearances till the date of exercising the option will be included for calculating the limit of Rs 50 lakh for application of the rate of duty.

In the budget for 1997-98, the scheme of exemption and concession from excise duty for small-scale units was modified.

The units were allowed to avail of exemption up to Rs 30 lakh and pay concessional rate of excise duty at a flat rate of 3 per cent ad valorem on the subsequent clearances worth Rs 20 lakh.

On the next clearance worth Rs 50 lakh, they were allowed to pay a flat rate of duty at 5 per cent ad valorem.

The concessional rates are applicable only if the small-scale unit does not avail of modvat benefits.

In case a small-scale unit wished to avail of modvat benefits, it was envisaged it would have to pay excise duty at the normal rate without any concession.