Writte off some SFG Material and transfer to scrap location

[Guest]

Dear Sir,

we write-off some stock like (SFG & R.M )and same items are transfer to scrap location. and when we clear the scrap from factory we paid Excise duty on that scrap.

So in this above case we need to pay Excise duty for the write off the SFG and R.M or not ?

Swapneswar Muduli

[Rajagopalan Ranganathan]

Sir,

If you remove SFG on payment of duty then you need not reverse the credit taken on inputs used in the manufacture of such SFG. In case of RM you should pay the duty on transaction value or the credit taken on such RM whichever is higher. You need not reverse the credit in view of write-off of SFG & RM since you are paying appropriate duty on their removal from your factory.

[YAGAY andSUN]

Rule 3(5B) of the CENVAT Credit Rules, 2004, provides that if the value of any input on which Cenvat credit has been taken is written off fully in the books of accounts, then the manufacturer is required to reverse the credit taken on the said input.

For details please check Circular No. 907/27/2009-CX, dated 07.12.2009

[Ganeshan Kalyani]

I agree with the views of Sri Rajagopalan Sir. Thanks.

AI Summary

Excise Duty on Write-Off: Pay Duty on Scrap Transfer of Semi-Finished Goods and Raw Materials per Rule 3(5B) CENVAT Credit Rules. A discussion on whether excise duty needs to be paid when writing off semi-finished goods (SFG) and raw materials (RM) and transferring them to scrap. The initial query asks if duty is payable for the write-off. One response clarifies that if SFG is removed with duty payment, credit on inputs need not be reversed, and for RM, duty should be paid on the higher of transaction value or credit taken. Another response cites Rule 3(5B) of CENVAT Credit Rules, 2004, requiring credit reversal if input value is fully written off. A third response concurs with the first reply.