Reversal of CENVAT credit -Reg.

[vinay wakde]

We have purchased a Storage Tax during 2004 for our plant and availed credit under Capital Goods. The said Tank was sold as scrap during 2010 and paid the duty as per transaction valve. Kindly let us know, whether the duty paid by us is correct or we have to reverse proportionate duty to the extent of CENVAT credit taken by us after considering depreciation 2.5% per quarter from 2004 to 2010.

Regards,

 

VINAY

[YAGAY andSUN]

Reversal of CENVAT credit after deduction 2.5% per quarter is the right method to setoff the Central Excise Duty.

AI Summary

Reversal of CENVAT credit requires proportionate depreciation-based adjustment on disposal of capital goods rather than transaction-value duty. Reversal of CENVAT credit is required on disposal of capital goods and should be effected by a proportionate reversal reflecting use since acquisition; the described guidance applies a quarterly depreciation deduction to the availed credit to compute the amount to be set off against duty on disposal.