Reverse in scrap of Asset

[Asked by Guest]

Dear Sir,

If we are scrap out our assets like our used machinery than on which amount we need to pay excise duty.

On Transaction value or on after reduction of 2.5% per quarter ?

We are removing as a scrap old used machinery not removing as such.

Regards

Swapneswar Muduli

[SHIVKUMAR SHARMA]

Dear Swapneswar

Please refer sub rule(5b) of rule 3 of cenvat credit rules 2004.

(b) If the capital goods are cleared as waste and scrap, the manufacturer shall pay an amount equal to the duty leviable on transaction value.]

Shivkumar sharma

[Ganeshan Kalyani]

Refer rule 5A (a)&(b) of CCR 2004.

[MUKUND THAKKAR]

How much old ?

if your machinery is very old and after the reduction of 2.5% your value is less than your Realization value, in such case you have to pay the excise duty on your Realization value. not value calculated after deduction of 2.5% per quater basis.

After the scrap , If your machinery is reusable in such condition you have to follow cenvat rules.

[Ganeshan Kalyani]

I agree with the views of Sri Mukundji. Thanks.

[Atul Kumar]

As per Rule 5A for capital goods, other than computers and computer peripherals @ 2.5% for each quarter to be reduced from transaction value.

Provided that if the amount so calculated is less than the amount equal to the duty leviable on transaction value, the amount to be paid shall be equal to the duty leviable on transaction value.

[Suryanarayana Sathineni]

Dear Friend,

It is a known fact and the same is already expressed by some of our learned friends.

There are 3 options provided for in the Rule 3(5) of CCR,2004 and they are briefly,

Clearing as such by debiting the amount of credit availed ; clearing after usage of some time by deducting 2.5% of credit for usage of each quarter and pay duty on the transaction value if the CG are sold in form of scrap.

Since, your subject query is what is the duty to be paid when you are selling/clearing the used CG by way of scrap, The answer is you need to pay duty on the transaction value at which such scrapped CG is being cleared/sold.

Best Regards

Suryanarayana

AI Summary

Duty on transaction value for capital goods sold as scrap, despite quarter-wise reduction allowances, governs payable excise duty.
Where capital goods are cleared as waste or scrap, duty must be paid on the transaction value at which they are sold or cleared. A quarter-wise reduction mechanism for used capital goods exists, but a proviso makes duty payable equal to duty on transaction value if the reduced calculation produces an amount less than duty on transaction value. If realization exceeds residual reduced value, duty is payable on that realization; reusable machinery is subject to cenvat credit rules for clearance.