Payment of duty with the scrap value

[Guest]

An Excisable unit has purchased some capital goods and packing materials ( input) after following cenvat rules.Now unit is going to close my queries are :- 1. Whether Capital goods ( machinery ) can be sold as Scrap & Westage and pay the amount ( duty) levy on it as per Cenvat Rule 3 (5A).? 2. In regard of Packing materials as it is not usable or transferable to other unit as it is printed and not reusable can we scrap it and pay duty on scrapped value or we have to pay duty the amount of cenvat credit taken at the time of purchase as per Rule 3(5) ? Manoj

[Surender Gupta]

If an excisable unit is going to close, it has to ascertain that all the inputs or capital goods on which Cenvat Credit has been lying in stock, either to reverse the Cenvat Credit originally taken or to pay the excise duty as per the applicable rules.

[Madhukar N Hiregange]

Capital goods which are used can be argued not to be as such under Rule 3(5) of CCR. Madhura Coats Tribunal decision also confirms this. Inputs reversal would be required. Scrap is also a finsihed item. preferable sell it on transaction value

AI Summary

Cenvat credit reversal: disposal of capital goods or printed packing requires credit reversal or duty payment on disposal. Where a unit closing has inputs, capital goods or packing materials on which cenvat credit was taken, it must either reverse the cenvat credit or pay excise duty under the applicable cenvat provisions when disposing of those items; capital goods used in manufacture may not attract the same reversal as unused inputs, and printed non reusable packing materials require reversal or duty payment rather than automatic scrap value treatment, with sale at transaction value preferred for scrap.