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Reversal of cenvat in case of capital goods rented out

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This query is : Resolved

CA Husain Saifee (Querist)

17 August 2013 Dear Experts
My query is whether there is a liablity to reverse Cenvat Credit on capital goods which are rented out to other company

CA Suresh Jain

CA Suresh Jain (Expert)

18 August 2013 If Capital goods are removed for providing an out put service then the CENVAT credit is not required to be reversed. Please refer first proviso to rule 3(5) of the Cenvat Credit rules 2004

Madhukar N Hiregange

Madhukar N Hiregange (Expert)

21 August 2013 ED is dependent on movement. If the CG have not moved and you are letting it out- it maybe liable for service tax. No need to reverse in such a case.

If removed from the premises, then liable to reverse the proportionate duty- allowed to retain 2.5% of credit per quarter after initial receipt. If machinery 5 years old then 50% of duty credit availed to be debited.

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