Dear all,
Our unit has removed several Capital Goods as such to other sister units. While transferring such capital goods we have reversed Cenvat Credit availed by us at the time of receipt of such goods. During an audit by Excise Department, the team has demanded reversal of credit of Service Tax paid on GTA service that was used in bringing the capital goods in question to the Manufacturers unit.
Rule 3(5) of Cenvat Credit Rules states that, "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"
Hence in my opinion only an amount equal to the credit availed in respect of such capital goods is required to be paid while removing capital goods as such. As far as credit of service tax on GTA is concerned, Cenvat is in respect of GTA service and not the Capital Goods concerned. Hence such credit is not required to be reversed.
Please suggest.
Thanks in advance.
CAclubindia
