Anubhav (Chartered Accountant) (429 Points)
19 August 2014Hi,
My client has recieved as a stock transfer of an asset worth 18 lacs from another unit of its. No vat charged on invoice but excise duty has been levied. This machine not manufactured by parent co.
My first question - In case of a machine not manufactured by parent company, whether any liability to pay duty will arise.
2) If yes - what will be the valuation in case of stock transfer.This is an inter unit trf from gurgaon to pune.
Thanks
CA R SEETHARAMAN
(CA Practice )
(143428 Points)
Replied 19 August 2014
For stock transfer no Excise duty will be levied. It may be due to any Excise duty concession availed while buying the equipment for the unit or cenvat credit on excise duty aviled for this equipment.
Rule 3
(5) When inputs or capital goods, on which CENVAT credit has been taken, are removed as such from the factory, or premises of the provider of output service, the manufacturer of the final products or provider of output service, as the case may be, shall pay an amount equal to the credit availed in respect of such inputs or capital goods and such removal shall be made under the cover of an invoice referred to in rule 9:
Anubhav
(Chartered Accountant)
(429 Points)
Replied 19 August 2014
| Originally posted by : SEETHARAMAN | ||
 |
For stock transfer no Excise duty will be levied. It may be due to any Excise duty concession availed while buying the equipment for the unit or cenvat credit on excise duty aviled for this equipment. Rule 3 (5) When inputs or capital goods, on which CENVAT credit has been taken, are removed as such from the factory, or premises of the provider of output service, the manufacturer of the final products or provider of output service, as the case may be, shall pay an amount equal to the credit availed in respect of such inputs or capital goods and such removal shall be made under the cover of an invoice referred to in rule 9: |
 |
1) Removal is not as such, Machine used bu parent compny for two years.
2) Parent co. reversed the credit taken by 2.5% per quarter for the number of quarter used.
3) Parent co. invoiced the other unit with the same amount of ED which has been paid by parent co as reversal of credit.
Arun Kumar Singh
(GST Advocate)
(15188 Points)
Replied 19 August 2014
You can transfer the cenvat credit from one unit to another unit even if the goods are not manufactured by you. You can transfer the inputs and capital goods on assessable value. You have taken the cenvat credit on that inputs then reverse the same. If capital goods then reverse the credit taken by 2.5% per quarter.
Venkatanarayana GM
(Partner associate at Hiregange & Associates)
(1279 Points)
Replied 21 August 2014
Dear sir,
Capital assests puchased by parent company would have availed Cenvat credit. And now it is transferring the same asset to its another registered premises for use in its business , the parental company will have to reverse the credit which availed earlier after claiming depreciation. Please refer Rule 3 of Cenvat Credit Rules 2004.
Extract of the relevant portion of law.
When inputs or capital goods, on which CENVAT credit has been taken, are removed as
such from the factory, or premises of the provider of output service, the manufacturer of
the final products or provider of output service, as the case may be, shall pay an amount
equal to the credit availed in respect of such inputs or capital goods and such removal
shall be made under the cover of an invoice referred to in rule 9:
Provided that such payment shall not be required to be made where any inputs or capital
goods are removed outside the premises of the provider of output service for providing
the output service:
[Omitted]
[Omitted]
“Provided further that such payment shall not be required to be made where any inputs
are removed outside the factory for providing free warranty for final products:
(5A) (a) If the capital goods, on which CENVAT credit has been taken, are removed after
being used, the manufacturer or provider of output services shall pay an amount equal to
the CENVAT Credit taken on the said capital goods reduced by the percentage points
calculated by straight line method as specified below for each quarter of a year or part
thereof from the date of taking the CENVAT Credit, namely:-
(i) for computers and computer peripherals:
for each quarter in the first year @ 10%
for each quarter in the second year @ 8%
for each quarter in the third year @ 5%
for each quarter in the fourth and fifth year @ 1%
(ii) for capital goods, other than computers and computer peripherals @ 2.5% for each
quarter:
Provided that if the amount so calculated is less than the amount equal to the duty
leviable on transaction value, the amount to be paid shall be equal to the duty
leviable on transaction value.
(b) If the capital goods are cleared as waste and scrap, the manufacturer shall pay an
amount equal to the duty leviable on transaction value.
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