Machinery on Rent - status of CENVAT

[Ashok Chopra]

Respected Forum,

Machinery received in the factory and CENVAT taken and utilized

Machinery used for three years.  both dutiable and exempted final product manufactured.

My queries:-

1. If i give entire Plant i.e. Land, Building, Machinery on Lease and charge Service Tax on Lease Rent, Am i required to reverse CENVAT taken on Machinery?  if yes, whether from CENVAT or PLA?

2. If i do not sell the machinery and keep it as it is then what will be the status of CENVAT?

Please guide me accordingly, also please provide me copy of notification/clarification/decision of any court to satisfy my excise authorities and management

Thanks and regards

AI Summary

CENVAT credit on capital goods can remain where machinery is leased and leasing service tax is charged.
CENVAT credit on machinery need not be reversed when the owner leases plant and charges service tax on the lease; reversal is generally required only when capital goods are removed from factory for non-taxable use. Leasing the assets after surrendering manufacturing/BAS registration can still constitute a taxable service (renting of immovable property service or supply of tangible goods service), and there is no statutory provision mandating CENVAT reversal under the stated conditions, though auditors may challenge the position.