Cess to be considered in the time of sale of capital goods

[vaibhav agrawal]

A) If an authorised dealer sells a demo car on which input tax credit (including Compensation Cess) was availed, then at the time of sale under Section 18(6), should the credit availed under Cess be computed as per Rule 44, or should Cess be charged directly on the value of supply?

B) Both Rule 40(2) and Rule 44(6) deals with determination of remaining input tax credit at the time of supply of capital goods. In such a case, which rule is applicable?

AI Summary

Rule 44 governs residual cess on demo car capital goods sale; Rule 44(6) overrides Rule 40(2) adjustments If an authorised dealer sells a demo car that had input tax credit including compensation cess, the adjustment at sale of a capital good is governed by the provision and rules specific to capital goods (Rule 44), so the remaining cess portion is determined as part of the residual input tax credit calculation under Rule 44 rather than by levying cess afresh on the supply value. Between Rule 40(2) and Rule 44(6), Rule 44 (which specifically addresses capital goods) applies to such capital goods adjustments.