Conversion of RG-1 Stock, Central Excise

[Rahul Patel]

Dear Sir,

We are having some stock of finished goods (assembled and appearing in Daily Stock Account / RG-1 say as Product A) which has no market; however there is a market for inputs used in the manufacturing of said Product A. In order to liquidate stock, we propose to sale inputs used in the said Product A in the market after doing dismantling work. Needless to mention that, we had availed Cenvat credit on the inputs used for manufacturing Product A.

Now Query is that:-

1- Do we have any excise liability in case we decide to dismantle the Product A? The process, we would to adopt, will be to issue the Product A again to manufacturing shop and perform dismantling operation.

2- Can we take back all the inputs to stock?

3- Can we sale these inputs on market value but discharge excise duty equal to CENVAT claimed at the time of purchase?

4- Do we need to reverse CENVAT on the inputs used in manufacture of Product A but became unusable / scarp while performing dismantling operation?

Regards,

Rahul Patel

Posts / Replies

[Pradeep Khatri]

Dear Rahul,

You would have to seek specific permission from the AC/DC/Commissioner of the Central Excise in this regard.

After getting the permission, and adherence with the conditions mentioned in the permission you may convert the finished goods in Inputs and remove after payment of duty or reversal of CENVAT credit (as the case may be).

Regards

Team YAGAY and SUN

(Management and Indirect Tax Consultants)