Excise duty on capital goods sales

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Rajesh (Querist)

16 December 2013 Sir,
Please help me to understand the calculation of Excise duty on sale of used capital goods/machinery say after 5 to 10 years.

Regards,
Rajesh Singhal

AJITHKUMAR M

AJITHKUMAR M (Expert)

16 December 2013 Dear friend,

The relevant rule of Cenvat Credit Rules, 2004 is

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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