ashok anand (ACCOUNTS EXECUTIVE) (61 Points)
07 January 2011Hi, To all,
Anyone can help me about the provision of Excise for excise liability on sale of machinery on closing of the manufacturing unit. Machinery was purchased more than 20 years back some one on excise and and some others are non excisable.
vikas
(Manager)
(118 Points)
Replied 08 January 2011
Please go through rule 3(5) of the cenat credit rules. the concept of the rule is just like depreciation.
you can retain 2.5% per quarter from teh date of cenvat taken. and whatever balance is available , it is your duty liability.
for example, if cenvat taken on machinery is rs. 1. corer on jan 2008. you have to reduce 2.5 lakhs rupees per quarter up to the date of sales. i.e. in our case up to december 2010 you can retain rs. 30 lakh and balance 70 lakhs you have to charge duty.
i hope u understood it. goint through rule will be more useful...
regards
Ratti Wahal
(Company Secretary)
(139 Points)
Replied 08 January 2011
Dear Mr. Ashok,
I also agree with Mr. Vikas. As per Proviso of Rule 3(5) of the CENVAT Credit Rules, 2004, 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.
In view of the above, please note that reduction was provided for 2.5% for each quarter of a year (accumulatd percentage for a year would be 10%).
As mentioned by your good-self the machinery was purchased almost 20 years back then it that case, your Company would be unde no obligation to pay any amount back as CENVAT calimed earlier.
Hope this justification acceptable by you.
Views of other members are solicied on this issue.
Regards,
As per proviso to CENVAT credit rules in case of removal of Capital goods there is two possibilities:-
a) If sold as a scrap :
then CENVAT credit availed earier on capital goods will be now payble.
b)If sold as a 2nd hand machinery :
then CENVAT credit availed earlier will be reduced % calculated as above
ie: Depending upon the Type of capital goods Percentage points calculated by
straight line method
1. Computers and computer peripherals
For each quarter in Percentage
Year 1 = 10 %
Year 2 = 8 %
Year 3 = 5 %
Year 4 & 5 = 1 %
2. Other capital goods 2.5% for each quarter
Analysis of 20 GST Notices (including 2 Appeals) and Practise on Drafting(with recording)
GSTR 9 and 9C for FY 23-24 as amended by Notification 12/2024 dated 10th July 2024(with recording)
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