Sale of Old Machinery

[RAM SHARMA]

Dear Experts,

We want to sale old and used machinery. Will we reversed cenvat credit  @2.5% per quater or to be charged excise duty on transaction value. Secondly can  a purchaser take cenvat credit on such cenvat reversal on machinery. Pl advice.

Thanks

[Mahir S]

Cenvat credit to be reversed after deduction of 2.5% of duty per quarter .

Yes, the purchaser can avail such cenvat credit reversed on old and used machinery.

[Ramesh Agarwal]

First of all you did not mention how old machinery was. If it is more than 10 years than you simply charge excise duty on transaction value and the purchaser take the cenvat credit of the same.

 

[RAM SHARMA]

Machinery is 5 years old. My question is that we have charged excise duty and cenvat reversed simentaniously. Secondly can  a purchaser take cenvat credit of cenvat reverse /excise duty charged on transaction value.

Thanks

[S GOMTESH]

You have to calculate  -

1.  duty for reversal @2.5% per quater

2.excise duty on transaction value

Whichever is higher needs to be paid.

[SANDIP PARIHAR]

@2.5% per quarter charge on transaction value

pl. send example for old machinery sale

AI Summary

Cenvat credit reversal: seller must reverse periodic proportionate credit or remit excise on sale value; purchaser may claim credit. Sale of used capital goods requires the seller to calculate both a periodic cenvat credit reversal and excise duty on the transaction value and remit the higher liability. Machinery older than ten years is generally taxed on transaction value with excise payable and the purchaser may claim cenvat credit on that duty. Purchasers can avail credit of duty reversed or charged, subject to normal credit eligibility rules.