MODVAT is MODIFIED VALUE -ADDED TAX

CENVAT is CENTRAL VALUE-ADDED TAX

Modvat (Modified Value Added Tax) was replaced by Cenvat (Central Value Added Tax) w.e.f. 1.4.2000. Principally, there is no difference between Cenvat and earlier Modvat. However, some differences are given below -

1. Cenvat is under rule 57AA to 57AK while Modvat was under rules 57A to rule 57V. These rules have been removed from statute book w.e.f. 1-4-2000 2. Modvat contained separate provisions for capital goods, while Cenvat rules combine provisions in respect of capital goods and inputs 3. 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 4.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. 5. In Modvat, inputs was 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. 6. Modvat could be availed only on 'duplicate copy of invoice'. Cenvat can be availed on any copy of invoice. 7. Moddvat contained provision that duty paying document will be valid only for 6 months. Cenvat does not contain any such restriction. 8. 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. 9.Modvat required installation of capital goods for availing credit. This requirement has not been specified in Cenvat.

Modvat is termed as Cenvat Clearing G/L which is posted while doing J1IEX, Whereas Offset G/L account comes in Picture when there is difference in J1IEX & MIRO Excise entries,

Modvat in Simple terms you can say is like GR/IR Clearing Account

You have to assign G/L's to these Offset and Modvat Clearing account for all the ETT you use like GRPO, EWPO, DLFC, CAPE, MARD, etc in Logistics-General > Account Determination > Specify G/L Accounts per Excise Transaction

Normally the Accounting entries will be like this

# At Time of MIGO Stock account GR/IR Account

# At time of J1IEX Part2 Posting Cenvat Account Cenvat Clearing Account(Modvat)

# At the Time of MIRO GR/IR Account Cenvat Clearing Account(Modvat) Vendor Account