Capital goods removed after 10 years

[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 andSUN]

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

Excise Duty on Capital Goods: Rule 3(5A) of CENVAT Credit Rules Clarifies Payment After 10 Years of Use. A query was raised regarding the excise duty payable on capital goods removed after 10 years. Two responses were provided. The first response advised checking specific rules within the CENVAT Credit Rules, 2004, which have been amended over time. The second response detailed Rule 3(5A) of the CENVAT Credit Rules, explaining that if capital goods, on which CENVAT credit was taken, are removed after use, an amount equal to the reduced CENVAT Credit must be paid, calculated by a specified percentage for each quarter. If cleared as waste or scrap, duty on the transaction value must be paid.