- Company A is the seller of one excisable factory and company B is the purchaser of that unit.
- The entire business sale was a "SLUMP SALE".
- Company A agreed to transfer CENVAT on capital goods lying in their books as per the slump sale agreement and all the conditions or rule 10 of Cenvat Credit rule is fulfilled.
- Now practically at the time of cut off date company "A" had nil balance in their RG 23 C ie cenvat account of capital goods.
- Now the question is, when company "B" is trying to sell any of its asset (which is now B's property after slump sale and B did not get any CENVAT balance on it), what is the tax liability on such asset.
As per CENVAT rule if it is removed as scrap then duty on transaction value and if it is removed as Asset then duty to be charged after 2.5% reduction per quarter.
Why "B" should pay excise duty as "B" did not received any CENVAT at the time of slump sale. Will "B" is liable to pay duty on such removal of capital goods.
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