LOSS OF SEMIFINISHED GOODS BY FIRE

[RAM SHARMA]

Dear Experts,

If some semifinished ,work in progess and machinery loss by fire then what will be the consequences in central excise point of view and insurance point of view.

Thanks

[YAGAY andSUN]

If you have get he insurance claim alongwith the potential duty element, then, you would have to reverse the proportionate CENVAT credit. 

[RAM SHARMA]

Is it compulsory to intimate in Excise Department.

[YAGAY andSUN]

Yes, since, revenue is involved in such incidence, therefore, it is compulsory to make them aware to cope with any unwarrented situations which may arise in the near future.

AI Summary

Reversal of CENVAT credit required when insurance recovers duty element for loss of semifinished goods by fire. Where insurance recovery includes the duty component for loss of semifinished goods or machinery by fire, the taxpayer must make a proportionate reversal of CENVAT credit attributable to the destroyed items, and must notify the Excise Department of the incident so the revenue consequences can be addressed.