reversal of central excise on goods damaged in transit

[SRINIVAS Parampalli]

kindly advise under which section of central excise rule can excise duty reversal can be made on finished goods cleared from factory after payment of duty. The goods carrying vehicle had met with an accident and the damaged machine brought back to factory. The machine cannot be repaired and had to be scraped. Also advise if CST paid on such goods can be reversed. Or is there any provision under central excise that duty can be adjusted against new machine that shall be supplied. Is it required the invoice raised on damaged goods to be cancelled

[Rajagopalan Ranganathan]

Sir,

If the machinery is damaged during transit, the same can be brought back to the factory for repair etc. The duty already paid on the machinery can be take as credit by the factory which receives the machinery for repair. It is not necessary that it should be taken back to factory from which it is cleared. If you are not able to repair the machinery and scrapped it, then you have to pay duty on the transaction value of the scrapped machinery. You cannot adjust the duty paid on the damaged machinery against supply of new machinery. You have to pay duty afresh on the new machinery which is supplied as replacement.

[Suryanarayana Sathineni]

Dear Srinivasan,

Mr. Rajagopalan explained the issue very clearly.

Any goods cleared on payment of duty from factory which damaged in transit , there is no requirement of reversing duty again since they are duty paid goods.

In addition to the clarification given by Mr. Rajagopalan, you also have an option to claim insurance from the Insurance company for value and duty if the goods are insured .

Best Regards

Suryanarayana

AI Summary

Excise duty on damaged goods: no reversal for duty paid clearances; fresh duty due on scrapped or replacement machinery. Excise duty already paid on goods cleared from a factory need not be reversed when the goods are damaged in transit; such duty-paid goods can be returned to any factory for repair and the duty paid may be taken as credit by the receiving factory. If the machinery is irreparable and scrapped, duty must be paid on the transaction value of the scrap, and the duty on damaged goods cannot be adjusted against a new replacement machine, which will attract fresh duty. Insurance recovery for value and duty is a possible option if coverage exists.