Excise implication, Central Excise

[madhavvan]

CO A had manufactured equipments as per customer B's specificatinos now he has cancelled the order is Co A required to reverse cenvat credit on raw material used for manufacture of those equipment what are the excise implications as Co A will now dismantle the equipment and use it for manufacture of fresh item

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[Surender Gupta]

It is amazing to see that you raised good queries covering various issues relating to central excise and cenvat credit. Regarding this query, as long as goods remain within the factory premises, despite the order has been cancelled and finished goods are dismantled to manufacture different items, there is no need to reverse the cenvat credit availed originally. However, if the new goods, to be manufactured after dismantling the original manufactured goods, are exempt from excise duty, then you need to reverse the cenvat credit or apply rule 6 as the case may be.