Capital Goods Duty

[Avinash Bhavsar]

Dear Sir,

We have pur the II hand machine from local they charge us duty 45% the slab is as under

Tool & Cutter M/c Value 125000

Excise Duty                         40418

Cess                                       1213

Total                                      16631

Vat 12.5%                             10829

Total                                    187460

They Pur the m/c form Praga Tools Ltd. Balanaga, Hydrabad

can we avail the excise duty, they mention in Inv goods being sold under Cenvat rule 3(5)(b), 2004

warm regards,

 

[YAGAY and SUN]

Yes, you can avail the CENVAT credit and Input Tax Credit since the machine is in use and still is capable to be used in manufacturing of finished goods. But you may avail the CENVAT credit on Capital goods to the extent of 50% in the first financial year and remaining 50% in the next financial year.

[MANDAVILLI RAMAKRISHNA]

they have to charge excise duty at the prevailing rat eon the value of the invoice value only.

better to check once again.

AI Summary

Cenvat credit on second hand capital goods permitted, with staged utilization across financial years and excise charged on invoice value.
Where a second hand capital good remains in use for manufacturing, the purchaser may claim both CENVAT credit and input tax credit; credit for capital goods is to be availed in two instalments across consecutive financial years. The seller is required to charge excise duty at the prevailing rate on the invoice value.