Rejected Goods

[SURYAKANT MITHBAVKAR]

We have purchased some old machine (Capital Goods) from our customer and after taken as input avail cenvat credit.

After modification in the same machine can we sell to our other customer mentioning same machine name which we have taken as input.

[KASTURI SETHI]

Yes. You will have to pay full Central Excise duty treating it as a new product on transaction value.Be serious about valuation of the machinery. Transaction value should not be reduced treating it being old machinery. It appears to me that you have not followed procedure laid down under Rule 16 A, 16 B,16 C of Central Excise Rules,2002. Deptt. is concerned with full duty otherwise audit objection would be raised.

AI Summary

Central Excise duty: sale of modified used capital goods treated as new product requires full duty on transaction value.
Sale of a modified used capital good taken as input with cenvat credit must be treated as a new product for excise purposes; full Central Excise duty is payable on the transaction value, and valuation must not be reduced because the machine was old. The respondent indicates procedures under Rule 16A, 16B and 16C of the Central Excise Rules, 2002 were not followed and warns of possible audit objections.