EXCISE DUTY ON SALE OF USED CAPITAL GOODS

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P.S.VISHWANATHAN

P.S.VISHWANATHAN (Querist)

11 January 2011 We had sold a capital equipment to our customers which had an excise duty element @ 16%. Since our customers could not implement their proposed expansion plans, the machinery remained largely unused. They want to resell it to us now and since we can suitably modify and offer for sale to a different customer, we have agreed.

The price has been settled . The customer however claim that 16% excise duty has to be levied since the same was bought at 16%. Is their contention correct? if so are we eligible to take input cenvat credit @16%?.

Madhukar N Hiregange

Madhukar N Hiregange (Expert)

12 January 2011 The formaulae is depreciation of 2.5% per quarter. if 3 years up then 30% credit NEED not be reversed only 70% reversable. You would be admissible for the credti on the amount charged.

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