What is the Different between CENVAT & MODVAT?

An excise tax in India 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.

Also See: What is the Role of SAP Functional Consultant in CIN?

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.

MODVAT required installation of capital goods for availing credit. This requirement has not been specified in CENVAT.

Also See: Period End Closing activities in Controlling

Recommended Reading For You

  • What is Excise invoice in SAP?What is Excise invoice in SAP?Excise invoice in SAP : A business document that is issued by your vendor to accompany any goods that it sends you. It stipulates how much excise duty has been paid on the goods.You can […]
  • Explain the Categories of General Ledger accounts in SAPExplain the Categories of General Ledger accounts in SAPTax Accounts are exclusively used as tax accounts. The collected tax will be credited into these accounts. While determining these accounts we have to specify the Tax type allowed. […]
  • SAP SD Accounting EntriesSAP SD Accounting EntriesInvoice Generation Invoices will be generated at the Smelters and stock points. The accounting entries for the sale of goods dispatch will flow from the Sales invoice generated in SAP […]
  • How to do Fiscal Year Variant Change in SAP?How to do Fiscal Year Variant Change in SAP?Fiscal Year Variant  The fiscal year variant determines the posting periods to be used by the client's company. SAP allows a maximum of 16 posting periods each fiscal year - normally 12 […]
  • Product Costing in SAP OverviewProduct Costing in SAP OverviewProduct costing is one of the important tools in SAP environment. It explains how to determine the cost of product or a unit. Product Costing is used to know the unit cost of the goods […]

Leave a Reply

Your email address will not be published. Required fields are marked *

%d bloggers like this: