Scrapped Steel Sale Excise Duty

[george thomas]

Dear Sir

We are doing manufacturing and trading of Edible Oil .We leased out land from Chennai Port and construct Storage Tank.Now we want to sell scrapped steel to one steel company.Plz advise excise duty is applicable or not for such sale ?

[Rajagopalan Ranganathan]

Sir,

Only you have availed the duty paid on the tank as credit, you have to sell the tank after reversing the credit taken on the tank. If you have not availed any credit of duty paid on the tank then you can sell it as you wish.

[Suryanarayana Sathineni]

Dear Friend,

Your query is not clear as to whether you are willing to sell the scrapped Tank as it is or intended to sell the dismantled tank into Steel pieces as scrap.

If it is intended to sell in form of tank as scrap you have to pay duty on transaction value if you have availed Cenvat Credit on the tank at the time of receipt on the leased premises. If you have not availed any credit, and selling the dismantled scrap of tank, you need not pay any duty since the said scrap is not generated in the course of manufacture of your final Products.

Best Regards

Suryanarayana

[KASTURI SETHI]

Sh.Surya Narayana Ji,

Thanks for detailed reply, Sir.

[CSSANJAY MALHOTRA]

Dear Mr. Thomas,

As far as I have understand that on leased land at Chennai Port, Storage Tank has been constructed (for storage of edible oil) and the leftover steel scrap needs to be disposed off.

Now the Issue arises who has undertaken the construction of Storage Tank and supplied the steel. If the steel is purchased by your company (NO CENVAT Claimed) and the construction contract is awarded to contractor then no duty is to be paid by your company on sale of steel scrap.

If the activity has been undertaken by the contractor including the supply of steel, then the leftover steel scrap (if the same is in your scope as per contract) is to be cleared without payment of duty by you.

Going by your query, it seems that you have purchased steel and awarded contract for construction of storage tank to someone else.

Please do elaborate your query so that the experts may guide you well.

AI Summary

Cenvat credit reversal required when input credit taken on tanks sold as scrap; otherwise sale of dismantled scrap is non-taxable. Excise duty on sale of tank scrap hinges on whether Cenvat Credit was availed: if credit was taken, the seller must reverse credit or pay duty on transaction value; if no credit was claimed and the scrap was not produced in the course of manufacture of the seller's product, disposal of dismantled scrap is not liable to excise. The contractual allocation of supply and construction between principal and contractor also determines which party bears any excise consequence.