Surrender of certificate by existing unit

[Asked by Guest]

A unit with plant & machinery on which cenvat credit taken four years back is running into losses and wish to close down the unit and surrender excise registration certificate. Quarry is whether the unit will have to pay excise duty on sale of machinery though for production its sale is less than 150 Lacs and company is no more taking input credit on raw material? Whether the company will have to pay excise duty on raw material laying in stock as on the date of surrender of registration?

[YAGAY and SUN]

CENVAT credit on Capital goods will be payable after deduction of 2.5% depreciation per quarter or duty on transaction value, which ever is higher w.e.f. 17-03-2012.

Cenvat Rule are amended to provide duty payable on the removal of used capital goods.

Amount will be payable either on the amount calculated based on CENVAT credit taken at the time of receipt reduced by prescribed percentage or the duty on transaction value whichever is higher.

(Provision made effective from 17 March 2012).

[rajkumar shukla]

For capital goods , yes as suggested by sri khatri.

For inputs it is to be calculated based on attributable credit taken.

[RadheyShyam Mangal]

If the unit has been under exemption based on value of clearances below 150 lacs, it would mean it has taken any credit on inputs received by it, therefore, the question of reversal of cenvat on raw material lying in stock on closure of unit does not arise. However for cenvat taken on Capital goods, the reversal of cenvat as per  CCR, 2004 is required to be made.

[rajkumar shukla]

The query says  COMPANY IS NO MORE TAKING THE CREDIT.hence it appears that earlier it was taking the credit. therefore it is required to reverse the credit..

[Vijay kumar]

Dear Sir,  for raw material you need not reverse any credit since in the present FY you would have already opted for exemption under  notification, no. 8/2003 CE and would have already reversed the credit in the beginning of the present FY on the stocks lying as on 1st of April. If that was not done, it needs to be done now since u have gone into exemption on that day. Regarding Capital goods, yr query reveals that earlier you have availed credit and now u wish to sell the same. As per the amended Rule 3(5) of Cenvat Credit Rules, 2004 you have to reverse the credit on depreciated value or pay duty on transaction value, whichever is higher. Regards - Vijay Kumar.

[Mahir S]

Just surrender the registration as question of reversal of cenvat credit on raw materials shall not arise in your case.

[Dilip Darji]

Dear Sir.

Kindly let us know whether, you were availing input credit in the year in which you availed Cenvat credit on Capital Goods. In which year you had availed Capital goods credit ? In which year you wish to remove such Capital goods (wherether it is before use or after use) ? 

AI Summary

Cenvat credit reversal on capital goods requires payment based on depreciated credit or duty on transaction value, whichever is higher.
Amended Rule 3(5) requires that on removal of used capital goods the assessee must pay duty either by reversing Cenvat credit reduced by prescribed depreciation or by paying duty on transaction value, whichever is higher. Reversal of credit on inputs in stock is required only if credit was earlier availed and is attributable to those inputs; if exemption was validly opted and no input credit taken, no reversal on raw material stock arises.