18 July 2013
As per Cenvat Credit Rule 5 When inputs or capital goods, on which CENVAT credit has been taken, are removed as such from the factory, or premises of the provider of output service, the manufacturer of the final products or provider of output service, as the case may be, shall pay an amount equal to the credit availed in respect of such inputs or capital goods and such removal shall be made under the cover of an invoice referred to in rule 9
Further Provided also that if the capital goods, on which CENVAT Credit has been taken, are removed after being used, the manufacturer or provider of output service shall pay an amount equal to the CENVAT Credit taken on the said capital goods reduced by 2.5 per cent for each quarter of a year or part thereof from the date of taking the Cenvat Credit
Therefore its mandatory to charge Excise Duty in case removal of plant & Machinery, However Receiving plant can claim Cenvat as normally.
18 July 2013
I agree with the expert. Plant 2 can very well avail the CENVAT benefits by cover of plant 1 excise invoice. What is the age of the machinery and have you utilised the cenvat of the said machinery in plant 1?
Please note, based on the life expectancy of the machinery, there is a possibility of declaring it as obsolete and old machinery. This will be valued at that time at a nominal value and only nominal duty will be payable (SCRAP VALUE).
In order to arrive at this value, we will be needing what was the original date of procuremenT. Also a techincal certificate stating the correct life expectancy of the machinery.
I WOULD BE GRATEFUL IF THE EXPERTS CONFORM THIS VIEW IS CORRECT OR NOT.
20 July 2013
In all cases whether or not machine is removed as Scrap otherwise, Excise duty is always liable to pay. For instance
A Machinery was purchased at Rs. 112000/- on 1/4/12 inclusive of Excise Duty of Rs. 12000/- and same was removed on 1/10/2013 at Rs. 10000 (scrap)/100000 (as such)
i) Case sold at Rs. 10000/- Excise duty liable to charge =12000-1200 (6000*2.5%*4 (1st year dep.)+6000*2.5%*2 (2nd year dep. for two qtr)+6000*2.5%*2 (2nd year dep for 2 qtr) =10800
20 July 2013
SEE, SIR, IN THIS CASE, THE MACHINERY IS MORE THAN 10 YEARS OLD, NOW IT IS VERY OLD AND OBSOLETE, THIS WILL BE TREATED AS A SCRAP, SO BOOK VALUE IS NIL, THEN, IF THE MACHINERY IS REMOVED AND TRANFERED TO ONE MORE UNIT ON INTER UNIT TRANSFER BASIS, ONLY NOMINAL SCRAP VALUE IS DECLARED AND DUTY WILL BE PAID ON THAT, KINDLY CONFORM, IF THIS IS CORRECT PROCEDURE, AND EXCISE LAW IS COMPLIED WITH, THANKS & REGARDS, SREENIVASULU
20 July 2013
You may be correct, However you have to ensure that Excise Duty should be less than as amt calculated in my last post. If further clarification needed please let me know at camukeshkumar@consultant.com with detailed working
CAclubindia
