Input as Such

[POLYPLEX CORPORATIONLTD]

Dear Expert

We had purchased some chemical in 2013 @ 180/- per litre. Now these Chemical is going to expire and customer give quotation to buy @ 30/- per Litre. As Chemical is our input material we take cenvat credit @ 12.36% accordingly in year 2013.

How to sell these chemical and on what the duty rate should we apply whether 12.50% or 12.36%

If we cleared input as such, we have to reverse the Central Excise Duty and recovers from customer. As duty amount is huge,customer decline to pay that duty amount. Kindly suggest in there is any other option?

Kindly suggest.

Sarvesh Bansal

[Rajagopalan Ranganathan]

Sir,

As per rule 3 (5) of Cenvat Credit rules, 2004 " when inputs or capital goods, on which CENVAT credit has been taken, are removed as such from the factory, or premises of the provider of output service, the manufacturer of the final products or provider of output service, as the case may be, shall pay an amount equal to the credit availed in respect of such inputs or capital goods and such removal shall be made under the cover of an invoice referred to in rule 9.

Removal of capital goods after being put into use is governed by rule 3 (5A) of the same rules.

In view of the above position, though you remove the inputs as waste, scrap etc, at a lower price, you have to reverse the credit taken by you however large the amount may be.

[Ganeshan Kalyani]

You will have to bear the consequences .

AI Summary

Reversal of cenvat credit required when inputs are removed as such; duty liability remains despite lower resale price. Reversal of cenvat credit is mandatory when inputs on which credit was taken are removed as such; the manufacturer must pay an amount equal to the credit availed and effect the removal under the cover of an invoice, and removal of capital goods after use is governed by a separate provision. This duty to reverse credit applies even if the inputs are sold as waste or at a lower price, and the seller remains liable if the buyer declines to pay the duty.