Capital goods removed after 10 years

[Asked by Guest]

Dear Sir,

Is excise duty payable on capital goods removed after 10 years,if yes pls give us any reference regarding this,pls explain, thanks and regards

[YAGAY and SUN]

Dear Sandesh,

Please check Rule 3(5) (5A) (5B) and read with proviso of the CENVAT credit Rules, 2004 as amended from time to time in this regard.

Regards

Team YAGAY and SUN

(Management and Indirect Tax Consultants)

[Rajagopalan Ranganathan]

Dear Shri. Shinde,

Please follow rule 3 (5A) of CENVAT Credit Rules, 2004 which is reproduced hereunder: -

(5A) (a) If the capital goods, on which CENVAT credit has been taken, are removed after being used, the manufacturer or provider of output services shall pay an amount equal to the CENVAT Credit taken on the said capital goods reduced by the percentage points calculated by straight line method as specified below for each quarter of a year or part thereof from the date of taking the CENVAT Credit, namely:-

(i) for computers and computer peripherals:

for each quarter in the first year @ 10%

for each quarter in the second year @ 8%

for each quarter in the third year @ 5%

for each quarter in the fourth and fifth year @ 1%

(ii) for capital goods, other than computers and computer peripherals @ 2.5% for each quarter:

Provided that if the amount so calculated is less than the amount equal to the duty leviable on transaction value, the amount to be paid shall be equal to the duty leviable on transaction value.

(b) If the capital goods are cleared as waste and scrap, the manufacturer shall pay an amount equal to the duty leviable on transaction value.]

AI Summary

Cenvat credit repayment on removal required; adjusted by depreciation schedule or transaction-value duty applies for capital goods.
Under Rule 3(5A) of the CENVAT Credit Rules, 2004, removal of capital goods on which CENVAT credit was taken requires payment equal to the credit taken less a straight-line quarterly depreciation apportioned from the date of credit; different quarterly reduction rates apply to computers and peripherals versus other capital goods, and the calculated amount shall not be less than the duty leviable on transaction value. Clearance as waste or scrap requires payment equal to duty on transaction value.