Sale of second hand machinery - cenvat credit

This query is : Resolved

P S Sadasivan (Querist)
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08 September 2011 Proviso to Rule 3(5) provides for levy of CENVAT under CENVAT Credit Rules at 2.5% rebate for every quarter on CENVAT availed on sale of second hand machinery

My query is - say a machine is bought for Rs. 10 Lakhs paying a duty of 10.30% i.e., Rs. 103,000. Now the machinery after being used for one year is sold, for say Rs. 15 Lakhs. Now should the CENVAT duty be Rs. 103000 Less 10% (2.5% * 4) or 10.30% of Rs. 15 Lakhs. Can any one throw light on this issue.

U S Sharma

U S Sharma (Expert)
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08 September 2011 13.5 Lacs *10.3%

CA.E.Deepan Chakravarthy

CA.E.Deepan Chakravarthy (Expert)
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09 September 2011 I think you would have availed 50% of cenvat for 1st year(i.e. 103,000*50% = 51,500). So, 90% of 51,500 is to be paid.
For example:
The said machine was purchased on May 2010, and sold on May 2011. The 50% of credit was taken for the month of July 2010 and remaining for the month of April 2011.
For the first 50% : Jul-Sep, Oct-Dec, Jan-Mar and Apr-Jun(part of quarter too considered) - 4 quarters so, 90%(100%-10%(2.5*4)) of 51,500 is to be paid
For the remaining 50% : Apr - Jun - 97.5%(100-2.5*1) of 51,500 is to be repaid.

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