excise on sale of machinry

[APPALI MURTHY]

1. we are selling the machinery purchased on 2 years back with out excise duty (glass annealing wire mesh conveyor electric furnace) now. whether i have to add duty on that machinery after deduction of depreciation as on date or not

2. Another machinery purchased on 04.05.2011 with duty also now we are selling what is theimplication of excise and deprection

[YAGAY andSUN]

CENVAT credit will be reversed after deduction of depreciation @ 2.5% per quarter.

[NEERAJ KUMAR, RANCHI]

Refer to Rule 3(5) of Cenvat Credit Rules' 2004 as per the Rule:

if the capital goods, on which CENVAT Credit has been taken, are removed after being used, the manufacturer or provider of output services shall pay an amount equal to the CENVAT Credit taken on the said capital goods reduced by the percentage points calculated by straight line method as specified below for each quarter of a year or part thereof from the date of taking the CENVAT Credit, namely:-

(a)   for computers and computer peripherals:       

for each quarter in the first year @ 10%

for each quarter in the second year @ 8%

for each quarter in the third year @5%

for each quarter in the fourth and fifth year @1%

(b) for capital goods, other than computers and computer peripherals @ 2.5% for each quarter.

[rajkumar shukla]

iT IS NOT CLEAR WHETHER  CENVAT WAS TAKEN AGAINST MACHINARY MENTIONED AT SR. NO 1. FROM THE QUERY IT APPEARS IT WAS NOT TAKEN. IN THAT EVENT NO REVERSAL WOULD BE WARRANTED

AI Summary

Cenvat reversal on sale of capital goods requires repayment reduced by prescribed quarterly depreciation, or none if credit wasn't taken. CENVAT reversal applies when capital goods on which credit was taken are removed: the seller must repay the CENVAT credit reduced by prescribed quarterly depreciation computed by the straight line method under Rule 3(5) of the Cenvat Credit Rules, 2004; computers and peripherals have different quarterly reductions while other capital goods follow the standard quarterly reduction. If CENVAT credit was not taken on the machinery, no reversal is required.