CAPITAL GOODS RETURNED

[SURYAKANT MITHBAVKAR]

We have sold one machine to our customer two years back. Now that customer returing the same machine to us. While returing the machine they have reduced basic price of machinery due to depreciation (as per Income Tax Act) but they have reversed full excise duty whatever they have taken credit originally (As per Excise Act)

 Excise duty is charge in their Invoice is not exact percentage on Basic Price of Invoice (excise duty is orginally credit they have taken)

In above case can we show such Goods as our Input ant avail credit of full excise duty or we can show that machine bringing for repair purpose and avail  Cenvat credit of full excise duty.

pl Advice

[YAGAY andSUN]

Please see the Rule 3(5), (5A)(a), (b) of the CENVAT credit Rules, 2004 in this connection.

AI Summary

Cenvat credit treatment for returned capital goods questioned after buyer reversed duty; refer to applicable rules. Seller received a returned machine for which the buyer reduced basic price due to depreciation but reversed full excise duty credit; the issue is whether the seller can treat the machine as an input and avail full excise credit or classify it as goods returned for repair and claim Cenvat credit. The reply refers to the relevant provisions of the Cenvat Credit Rules, specifically Rule 3(5) and Rule 3(5A)(a) and (b), governing reversal and re availment of credit on returned capital goods.