Capital Goods removal after 10 years usage to our Own unit II - under excise invoice with zero duty -

[venkataraman swaminathan]

Dear sir,

We removed one capital goods ( Machine) to our own Unit , Unit 2 ( ie. from Unit 1 to Unit 2 ) . The said machine is more than 10 years from the date of credit taken . Hence we cleared this CG under our excise invoice with a value of ₹ 5 lacs and in the invoice we printed more than 10 years & no duty applicable .Not for sales /stock transfer only. Now audit raised audit point , that because the value is indicated in the Excise Invoice we need to pay duty even though the life of said CG more than 10 years the value to be treated as transaction value & duty to be paid .

. Request Experts opinion and if any case law reference please.

AI Summary

Cenvat reversal on removal of capital goods: duty may attach based on transaction value; credit transferable to receiving unit.
Under Rule 3(5A) of the Cenvat Credit Rules, 2004, removal of capital goods used by a manufacturer after taking CENVAT credit requires payment equal to credit taken reduced by 2.5% per quarter; after ten years the reversal becomes nil. However, the proviso makes duty payable equal to duty leviable on the transaction value if the calculated amount is less than that duty. Thus invoicing used capital goods for transfer between units can attract duty on declared transaction value, although the receiving unit may claim credit for such duty.