Duty to be paid on capital goods removal

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

13 September 2013 INITIALLY CAPITAL GOODS PURCHASED WITHOUT EXCISE DUTY AND NOW WE WANT TO SALE THIS CAPITAL GOODS AFTER USE (I.E.AFTER 2 YEARS), WHAT EXCISE DUTY IS PAYABLE ON THIS? ( NIL OR ?)

Ram Avtar Singh

Ram Avtar Singh (Expert)
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13 September 2013 No renvat credit taken at the time of purchase then no excise duty libility at the tiome of sale.

Further, the assessee had produced the copy of the Certificate issued by Shri Balkrishna T Thakkar & Co., Chartered Accountant dtd 29.03.2011 under which it is mentioned that “it appears that machineries in questions were purchased before more than eight complete financial years” hence, as per sub rule 5 or Rule 3 of Cenvat Credit Rules,

Provided further that if the capital goods, on which CENVAT Credit has been taken, are removed after being used, the manufacturer or provider of output services shall pay an amount equal to the CENVAT Credit taken on the said capital goods reduced by the percentage points calculated by straight line method as specified below for each quarter of a year or part thereof from the date of taking the CENVAT Credit, namely:-

(a) for computers and computer peripherals:

for each quarter in the first year @ 10%
for each quarter in the second year @ 8%
for each quarter in the third year @5%
for each quarter in the fourth and fifth year @1%

(b) for capital goods, other than computers and computer peripherals @ 2.5% for each quarter.

14. By this, annual depreciation for capital goods comes @10% (2.5% for each quarter) means the capital goods value become zero after using it for constant 10 years. As mentioned by the assessee in their written submission dtd 01.04.2011 that they have sold the obsolete machinery vide the debit entries which were purchased as long back as during the year 1991 to 1994. The debit notes were issued in the month of March 2010. It means that more than 10 years have already been lapsed for that machineries

and after deducting the depreciation of that machinery, the value of the machinery becomes NIL and as they informed that at the time of purchase, they have not taken Cenvat credit on that goods. Even though no evidence has been brought on record that the waste and scrap has been arisen out of the capital goods on which the modvat credit was availed by the assessee.

15. In view of the above, I pass the following order :
:: O R D E R ::

I hereby drop the proceedings initiated against M/s Devarsons Industries, Odhav, Ahmedabad under the SCN dtd 08.03.2011. Accordingly, the SCN dtd 08.03.2011 is being disposed off.

(RAM NARAIN)
ASSISTANT COMMISSIONER,
CENTRAL EXCISE, DIV.III,
AHMEDABAD-II.

F.No.V.32/3-29/Devarsons/Dem/10-11 Date 21/04/2011

To,
M/s. Deverson Industries Pvt. Ltd.,
Plot No.441, GIDC Road, Odhav,
Ahmedabad-382415.

Copy to :

(1) The Commissioner, Central Excise, Ahmedabad-II
(2) The Assistant Commissioner of Audit, Central Excise, Ahmedabad-II.
(3) The Supdt. C.Ex. AR-III, Dn.III, A’bad-II
(4) Guard file.

(5)