TaxTMI 
TaxTMI 
What will be the transaction value and duty involvement when we transfer capital goods from one unit to another(sister concern) after using the same for more than ten years.
Inter unit transfer of capital goods
29 Mar 2012 
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Inter unit transfer of capital goods: CENVAT adjustment applies but is reduced by prescribed depreciation, possibly eliminating liability after long use.
When capital goods on which CENVAT credit was availed are removed from the factory, the manufacturer must pay an amount equal to the credit availed, reduced by prescribed straight-line quarterly depreciation rates; after prolonged use the cumulative reduction may eliminate the payable adjustment. The transfer must be made under the prescribed invoice, and the transferor bears the burden of proving the goods' age to claim reduced liability. (AI Summary)
When capital goods on which CENVAT credit was availed are removed from the factory, the manufacturer must pay an amount equal to the credit availed, reduced by prescribed straight-line quarterly depreciation rates; after prolonged use the cumulative reduction may eliminate the payable adjustment. The transfer must be made under the prescribed invoice, and the transferor bears the burden of proving the goods' age to claim reduced liability. (AI Summary)