Payment of duty on clearance of machinary, Central Excise

[raj kumar shukla]

Dear sirs,

In case of clearance of cenvatted old and used machinary after 10years i.e. after its depreciated value becomes zero ,how the cenvat is to be reversed and invoice prepared.As per rule 3 (5A) ,if the capital goods are cleared as waste and scrap, amount equal to duty leviable on transactional value is to be paid. Is invoice to be prepared showing it as waste and scrap or wornout machinary?

Posts / Replies

[Rahul Sonawane]

Dear Raj,

If you are clearing  the capital goods as such than you need to reduce the cenvat availed, by 2.5% per quarter from the date of receipt/Installation of Machine,  and if you are selling the Machine as a waste & scrap you need to pay the duty on Transaction value.

 

[raj kumar shukla]

I have already specified that the machinary is 10 years old.meaning thereby after reducing it by 2.5% per quarter, it becomes zero. How the cenvat is to be reversed.? normally no credit would be required to be reversed. However if examined in light of above mentioned rule, amount is to be paid.   How the invoice is to be prepared. will it be waste and scrap or will it be machinary which has worn out?

[Rahul Sonawane]

Dear Sir,

That is what i have mentione below ,  how to prepare Invoice is depends on, what you going to sell whether as a  Machine or as a scrap.

 

[Pradeep Khatri]

If the machine is in the working condition and your customs will use it for manufacturing of final product, then, there is no need to pay duty on the transaction value since the Rule 3 (5A) comes into the picture if the machine is being removed as waste and scrap.

Further, you must mention on the invoice that machine is more than 10 years old and is in working condition. One more precaution you would have to take that machine should not be dismantled.

 

[raj kumar shukla]

DOES THAT MEAN DUTY IS DEPENDENT OF PROFILE OF CUSTOMER/END USE?

[Pradeep Khatri]

Yes, if the machine is capable to manufacture final products then there is no requirement to pay the duty on the transaction value as the machine has not been scrapped.