Correct valuation - Applicable duty rate

[Rajkumar Chandnani]

We imported machine in 2004, took cenvat cr of duty paid @ 16%. This machine is now sold by paying duty at WDV as per Account books at current prevailing duty rate i.e 8%. What should be currect .....valuation and .....applicable duty rate ?

[Guest]

Pl. refer Seventh proviso of Rule 3(3) CENVAT Credit Rule 2004 which says 'Provided also that if the capital goods , on which CENVAT credit has been taken, are removed after being used, the manufacturer or provider or output service shall pay an amount equal to the CENVAT credit taken on the said capital goods reduced by 2.5% percent for each quarter of a year or part thereof from the date of taking the CENVAT credit.'

[Rama Krishana]

View express by Mr. Pradeep Khatri must be followed. Your action of payment of 8% on imported machinery on WDV is not correct.

AI Summary

CENVAT credit adjustment requires repayment on disposal of capital goods, calculated by reducing original credit over use period. Where capital goods on which CENVAT credit has been taken are removed after being used, the manufacturer or provider or output service must pay an amount equal to the CENVAT credit taken on those capital goods, reduced by a prescribed rate for each quarter or part thereof from the date of taking the CENVAT credit, and valuation by merely applying current duty to the written down value is not the correct discharge of that obligation.