sale of used Capital goods -reg

[vinay wakde]

We are selling old oxygen Injection unit and other equipments to our parent unit, which is not used by us. The same were received around 11 to 12 years back. Whether, we have to pay an amount equal to the CENVAT Credit taken on the said capital goods reduced by 2.5% depreciation per quarter calculated by straight line method as per sub rule (5A) of Rule 3 of CCR, 2004 or Excise duty to be paid on transaction value at the time of removal of capital goods.

Whether, we have to obtain any certificate from chartered Accountant before sale of Capital goods from the factory?

[KASTURI SETHI]

No need of C.A.' s Certificate. Old and used capital goods being more than 11-12 years old, depreciation method will not work. So you are advised to pay duty on transaction value and mentioned the word,'Scrap---name of capital goods.'

[Suryanarayana Sathineni]

Dear Friend,

Since the duty become ZERO in terms of the rule specifying 2.5%, you need not pay duty equivalent to the amount of credit taken and that too you are clearing the equipment under the same name. Pl. try to indicate the Date of receipt and date of credit availed on the equipment on the relevant clearance documents.

However, if clear the said equipment as scrap of Oxygen Injection unit, then you have to pay the duty on Transaction value.

Best Regards

Suryanarayana

[Ganeshan Kalyani]

Sir the querist has mentioned that the said capital asset was not used. Whether in such situation also the reversal provision shall be applicable. Here the querist is requested to clarify whether the cenvat credit was availed and utilised when the same was received a decade ago. Thanks.

[KASTURI SETHI]

Dear Sir,

Though the querist has not mentioned the word, 'Utilised' it appears that credit has been taken and utilised. So Sh.Surya Narayana's reply is perfect and resolves the problem of querist.

[vinay wakde]

Thanks for your clarification in the matter.

With Regards,

VINAY

[KASTURI SETHI]

COMMISSIONER OF C. EX., COIMBATORE Versus LAKSHMI MACHINE WORKS LTD. - 2015 (3) TMI 694 - MADRAS HIGH COURT
 

[Ganeshan Kalyani]

Sir, I am not paid member of TMI, so cannot access the link of the cited case law. Thanks.

AI Summary

Sale of used capital goods: treat duty on transaction value for very old assets; no CA certificate required. When selling old capital goods to a related unit, the quarter-by-quarter depreciation reversal under Rule 3(5A) of the CCR, 2004 is typically inapplicable for very old assets and duty should be calculated on transaction value at removal; describe the goods as scrap on documents. No chartered accountant certificate is required. If the depreciation formula produces nil duty and the asset is cleared under the same name, no additional duty is payable. Parties should record date of receipt and date of credit availed. Applicability depends on whether CENVAT credit was availed and utilised.