CENVAT CREDIT AVAILED ON ASSEST SALE BY OUR CUSTOMER

[SURYAKANT MITHBAVKAR]

we are manufacture  of Machinery. We had sold one machine to  our customer in year 2011. Now customer intend to sale the same machine to us as assest sale after reversing excise duty which he had availed credit earlier with basic amount (after deducting depreciation).

In our case can we take the same machine as input and avail cenvat credit for the same or we have to show  sales return and avail cenvat credit .

 

Please advice.

[Mahir S]

You have not specified the further use of such machinery at your end.

However, If the said machine is to be used in your factory premises, then receive it as an input and avail cenvat credit.

If it is required to be re-sold again to another customer, then show it as sales return and avail cenvat credit.

 

[SURYAKANT MITHBAVKAR]

 If  the said machine we take as input &  dismantle the parts &  use the parts in various machinery wherever

suitable and some parts  cleared as scarp.

 In this procedure  we do not have any co- relation regarding clearance of machine parts of the said    

machine.

Whereas the Law says if  we take credit on  Finished Goods which is return by our customer it is importance

to show clearance of the same with payment of Excise duty either equal to credit or more than credit avail. 

Still can we avail credit in the above matter.

Pl. advice. 

 

AI Summary

Cenvat credit eligibility on reacquired machinery depends on treating it as input for use or as sales return for resale. Question whether a manufacturer can avail CENVAT credit upon reacquiring a previously sold machine as an asset purchase after the customer reversed excise credit. If the machine is for in-factory use (including dismantling for parts) it may be received as an input and credit claimed, subject to input acceptance and documentation rules. If intended for resale, the transaction should be treated as a sales return and credit claimed accordingly. The note warns that returned finished goods often require clearance with duty payment equal to the credit, and dismantling/use of parts must still comply with reversal or adjustment obligations.