Scrap for Corregated shipper

[Guest]

Dear Team,

this is for your information, we are using corrugate shipper for packing our finished goods product

now the question,can we pay excise duty while the same cleared as scrap.

so please give your opinion, on priority. we are clearing damage or old which is not fit to use corregated shipper as scrap without payment of duty.

also, please provide supporting rule or cases.

Thanks & regards,

Pradip Sirsat

[SANJAY SURYAWANSHI]

Dear Pradip,

1) You clear, can u take CENVAT Credit on this material?

2) As per Circular 721/37/2003-CX Dtd 6th June 2003, if you clear Packaging material in which raw material received, that you can clear without payment of duty.

3) This is your one of your Input of FG.

4) If you take a CENVAT Credit,& it is not fit/ suitable for use, It is better to take Charter Engg. Certificate that market value is zero or pay the duty on transaction value naturally it less that purchase value. But it is safe to take a Charger engg. certificate.

Regards,

Sanjay V.S.

[Guest]

Dear Sanjay,

thanks a lot for your quick reply.i am clarify below some point.

1) yes, we availed cenvat credit as a packing material.

one thing is i would like to inform you that, when this material cleared as scrap to our scrap vendor we are not charging Excise duty. now, what my is this can we impose excise duty while clearance as scrap?

it is not that this unfit to used to finished goods, but this materail scrap due to various reason.

that's why am asking.

kindly request to you, please give your opinion

Thanks,

Pradip

[SANJAY SURYAWANSHI]

Dear preadeep,

1) If you avail the CENVAT Credit, than you have the reveres/pay the duty on that material. That point is clear.

2) Any reason material is not fit for production/ use, that means not you clear this material as a scrap without payment of duty.

In this case duty is applicable.

Regards,

Sanjay V.S.

[Mahir S]

Sir,

Forget about whether duty required to be paid on scrap or not.

In your case, you have to pay duty as much u have availed on it.

The audit officers in the working in the new Audit Commissionerates are very intelligent and smart and you shall be liable to reverse the cenvat credit availed and also pay interest and penalty thereon.

[YAGAY andSUN]

Dear Pradeep,

You would have to reverse the equivalent CENVAT credit so availed on such transaction.

Regards,

YAGAY and SUN

(Management, Business & Indirect Tax Consultants)

AI Summary

Cenvat credit reversal required when packaging materials cleared as scrap, else duty liability and penalties may follow. Availing CENVAT credit on packaging material triggers an obligation to reverse the equivalent credit when such material is cleared as scrap; practitioners recommend either a Chartered Engineer certificate showing nil market value or payment of duty on the transaction value, and warn that auditors may require reversal with interest and penalties if credit is retained while scrap is cleared without duty.