Excise duty on scrap

before discussion, it should be clear that what is status of unit , availing 8/2003 or paying duty?

we are a manufacturing unit clearing products paying duty.

steel and other items are procured for construction  of storage tanks/structural supports etc.

since steel is used for storage tanks, which Dept may treat treat as immovable property(embedded to earth), we are not availing cenvat. credit on steel

since cenvat credit is not taken, while selling steel scrap, after demolition of tanks) , duty is payable 

For items mentioned in b and c, collect excise duty on basic value of sales amount of scrap.
Since Cenvat was not claimed for items mentioned in point a excise duty need not be collected on sales.  

Rule 3(5A) of Cenvat Credit Rules 2004 says, "If capital goods are cleared as waste and scrap, the manufacturer shall pay an amount equal to the duty leviable on  transaction value".

Hence, queries at (a) & (b) , does not make any difference whether Cenvat has been availed or not at the time of purchase.   Since the law does not  differenciate between Cenvat availed  materials and the not availed,  for the above rule, ED has to be paid on the transaction value.

However,  a different view was taken by some experts that since  Cenvat Credit Rules is applicable for Cenvat availed materials, above rule 3(5A) does not apply  on non-cenvatable items. 

Readers may pls respond.

Rule 3(5B) says, if   unique spares are written off or provision created in books,  ED equivalent to  Cenvat credit taken  has to be paid. 

Soman NL, Manager Finance, BPCL - Kochi Refinery

Respected Sir,

If we look in to definition of Capital goods it incluide Storage tank as CG. So you can avail cenvat credit on the same subject to same is utilised for manufacturing purpose.

2. Definitions. -   In these rules, unless the context otherwise requires,-

(a) "capital goods" means:-

(A) the following goods, namely:-

(i) all goods falling under Chapter 82, Chapter 84, Chapter 85, Chapter 90, heading No. 68.05 grinding wheels and the like, and parts thereof falling under heading 6804 of the First Schedule to the Excise Tariff Act;

(ii) pollution control equipment;

(iii) components, spares and accessories of the goods specified at (i) and (ii);

(iv) moulds and dies, jigs and fixtures;

(v) refractories and refractory materials;

(vi) tubes and pipes and fittings thereof; and

(vii) storage tank,

used-

(1) in the factory of the manufacturer of the final products, but does not include any equipment or appliance used in an office; or

(2) for providing output service;

Regards,

Nitin Karmalkar

M.No.9822610852

we manufactures the container used for carrying the proccessed, semi- proccesed,& finished goods and takes the cenvat credit for purchasing thr raw material , so i want to know that on making the sale of scrap should we charged the duty on sale of scrap or not.