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

Debate on old capital goods sale: Pay excise duty on transaction value as scrap, not reduced by depreciation. No CA certificate needed. A discussion on the sale of old capital goods, specifically an oxygen injection unit, raised questions about the applicability of CENVAT credit and excise duty. The main query was whether to pay a reduced amount based on depreciation or duty on transaction value. Responses suggested that due to the age of the goods, depreciation does not apply, and duty should be paid on transaction value, labeling the goods as scrap. It was also noted that no certificate from a chartered accountant is necessary. Clarification was sought on whether CENVAT credit was utilized when initially received.