According to a senior finance ministry official, such credit can be taken by an assessee in respect of these inputs (goods falling under sub-heading Nos. 2404.40 and 2404.50) received in his factory on or after March 1, 2000.

Earlier, this benefit was made available to other forms of tobacco used as inputs. Considering that manufactured tobacco (chewing tobacco and snuff of tobacco and their preparations) too is used as input for making tobacco products, CENVAT benefit has been extended to it, said the official.

The step was a part of the changes in the CENVAT rules to accommodate genuine demands of the industry raised during the post-budget discussions with the ministry officials, he added. Extension of the CENVAT credit in respect of SED to manufactured tobacco will also curb evasion of duty, he added.

Among other changes in CENVAT rules, provision has been made to allow assessees to take credit of the amounts debited by them when sending inputs to a job worker in accordance with the provisions of the erstwhile rule 57F(4), and where such inputs have been received back in the factory on or after April 1, 2000.

In terms of the provisions of rule 57AC, an assessee can avail credit in respect of duty paid on capital goods to the extent of 50 per cent of such duty in the financial year in which he receives the capital goods. The balance credit may be taken in subsequent financial year subject to the capital goods still being in the use and possession of the assessee.

It had been represented that this condition could not be satisfied in respect of certain capital goods like components, spares and accessories, refractories and refractory materials, abrasive powder and grinding wheels in a subsequent financial year without the condition of these goods being in the use and possession of the assessee in the subsequent year.

The effect of this amendment would be that the assessee would avail credit of 50 per cent of the duty paid on components, spares and accessories, refractories and refractory materials, abrasive powder and grinding wheels in the financial year in which he receives these goods in his factory; the balance 50 per cent credit may be availed by him in a subsequent financial year even if these goods have been used by him, and are no longer available in such subsequent financial year.

If the components, spares and accessories, refractories and refractory materials, abrasive powder and grinding whhels have been removed by the assessee from his factory without being used, then the provisions of clause (b) of sub-rule 1 of rule 57 AB would apply, and the assessee would be required to pay duty on them accordingly.

In such cases, no credit would be admmissible in respect of the balance 50 per cent in the subsequent financial years. This is subject to the condition that such goods are niot sold without use or after use before taking the second instalment of 50 per cent credit.

The official said that the changes have already been notified last week.