Reversal of cenvat credit - registration surrendered

[kiran kujur]

I have surrendered my C.Ex. Registration Certificate but there are cap. goods still installed in the factory and 50% of the credit of the same has been utilized for payment of duty on finished goods. Is it mandatory in terms of cenvat credit rules 2004 to reverse the credit/ pay an amount equal to credit taken in cash as we are not in a position to use the cap. goods for manufacturing activity. since there is no physical removal of the cap. goods from the factory but Revenue asked us to reverse the credit because it will be deemed removal on the date of surrendering of R.C. and without reversal of the same, surrendering of R.C will not be accepted by the Revenue. Pl make reference of some Judgments as we do not want to reverse/ pay the credit. Is reversal of credit is applicable of stock on inputs unutilized on the date of Surrendering of R.c

[Rama Krishana]

No, once the capital goods are brought into factory premises, credit availed as per the provisions of cenvat credit rules, 2004, at the time of availing cenvat credit you were manufacturing excisable goods and such capital goods were eligible capital goods, there is no provision in the Cenvat Credit Rules, 2004 to reverse the credit on mere surrender of excise registrtion certificate. The action of the revene is not correct. There is no deeming provision in central excise or cenvat credit that on the date of surrender of excise registration the machinery shall be treated as removed.

AI Summary

Cenvat credit reversal is not triggered by mere surrender of excise registration; installed capital goods are not deemed removed.
Mere surrender of an excise registration certificate does not, by itself, require reversal of cenvat credit on capital goods installed in the factory; the Cenvat Credit Rules, 2004 contain no deeming provision treating installed machinery as removed on surrender, and reversal is not mandated unless statutory conditions for reversal are otherwise met.