Unutilised cenvat credit on CG after DTA to EOU conversion

[Rahul Sonawane]

Dear All,

We have converted our exising DTA unit into EOU. We have unutilised cenvat credit on capital goods lying with us on  the date of DTA to EOU conversion,  my query is that whether we can utilize this unutilised credit after conversion for payment of Excise duty on DTA sales.

 

Rahul Sonawane

 

AI Summary

Cenvat credit on capital goods may be non-transferable on DTA-to-EOU conversion unless statutory transfer conditions are met.
Unutilised cenvat credit on capital goods on conversion from DTA to EOU is transferable only when the conversion meets prescribed transfer criteria such as factory shift or change of ownership; otherwise the capital goods must be removed on payment of duty after allowing depreciation or dealt with under the fully depreciated goods provision. Duties paid in the DTA can be availed as credit by the EOU and used for DTA sales. Practical commentary indicates that conversion at the same location under prevailing foreign trade procedures may cause such cenvat credit to lapse.