We have one capital goods received in 1989.No record is avialble for this but this is the only memory of senior employees of company Now we wish to transfer it in our sister unit. What is the procedure for transfer it?
02 January 2010
In brief the provisions in relation to removal of capital goods from the manufacturer factory are as under, 1. If the capital goods is being removed as such(means without use), the manufacturer is required to pay equal amount of CENVAT credit availed on the subjected capital goods, 2. If the capital goods is being removed on after use, the manufacturer is required to pay equal amount of CENVAT credit availed on after adjusting 2.5% depreciation for quarter on the subjected capital goods, 3. If capital goods is being removed as scrap, the manufacturer is liable to pay amount of CENVAT credit equal to the transaction value on which the capital goods as scrap is being sold.
In the above backdrop, the Modvat credit of duty paid on capital goods was first time introduced in the year 1996.
As per your record the present capital goods was purchased some around in 1989. So definitely no credit would have been taken at the relevant time. Hence the present law requires the equal amount reversal, accordingly when no credit has been taken, there is no need to pay any credit amount specially when the capital goods is not being removed as scrap.
For further query, feel free to write sanjayinfbd@yahoo.com (M-09350048731) or visit, HNO. 2489/8,Faridabad(Haryana).
03 January 2010
Since no records are available it would be difficult to justify the purchase date. Ideally you should pay duty on the book value to avoid litigations, anyways your sister unit will be eligible for cenvat credit and the transaction is revenue neutral.
04 January 2010
Dear Sir. If you have not availed CENVAT credit on the Capital Goods procured by you (either in the year of purchase or in the subsquent years), there is no question of following any procedure by you at the time of is removal from your factory.You may remove Capital Goods to your customer/buyer by simply indicating on the front of transit document that "CENVAT CREDIT NOT AVAILED).You cannot charge any excise duty at the time of such removal. REGARDs. DILIP DARJI.
04 January 2010
As from the books of accounts, the book value is traceable, then it would not be difficult to ascertain the year of purchase. By any means if it is established that machine was purchased some around 1989 or prior to 1996, I strongly recommend not to pay any CENVAT credit amount by abundant precaution or otherwise. As in these circumstances, the CENVAT credit amount payment is neither logical nor legally sustainable.
If u hav'n't availed CENVAT credit on these Capital Goods procured by you (either in the year of purchase or in the subsquent years), there is no question of above procedure by you at the time of is removal from your company.You may remove Capital Goods to your customer/buyer by simply indicating on the front of transit document that "CENVAT CREDIT NOT AVAILED).You cannot charge any excise duty at the time of such removal. REGARDs. ramesh
CAclubindia
