5.
Mr Vaideeswaran easwaran
You need not reverse the credit already taken by you at the time of procurment.. You can retain the credit since there is no physical removal of tools / dies from your factory and instead the same is ratained within the factory and used in the manufacture of excisable goods on which duty is payable. Further, the ownership of capital goods is not the criteria for eligibility of cenvat credit. The only condition is ' such capital goods should be used in or in relation to the manufacture of dutiable excisable goods' In the present case the above condition is satisfied.
Reversal of credit is required only when the capital goods are either removed as such or removed after use in terms of Rule 3(5) of Cenvat Credit Rules.
Hence, you may raise an invoice to your customer for the basic agreed value without charging any excise duty but charging applicable sales tax. You may mention in the invoice as "there is no physical removal of such capital goods and instead the same is retained within the factory in the manufacture of excisable goods on which duty is payable. This invoice is raised only to pass on the ownership of the same.
However, subseqently if the tools/ dies are returned back to the customer for any cancellation of order or for any other reason, at the time of removal, you have to reverse the credit in terms of the proovision of cenvat credit rules 3(5A) (b) which is applicable for 'removal of used capital goods'
S. Gokarnesan
Advocate
12.9.2012