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Meaning of "removed as such" in IDT

kckinn (CA) (759 Points)

19 July 2013

This phrase , "inputs removed as such", appears in IDT in relation to Cenvat Credit Rules. I am not sure about the meaning of this.

I think it means, inputes were removed without being used. Is this correct ?

Doubt- As per Cenvat credit rules, Rule 4(2)(a), [Page 4.28-4.29 of Bangar],

"If the capital goods are removed as such in the year of acquisition, the credit of the whole amount of duty paid on such goods shall be allowed in the same financial year".

Question: If the capital goods are USED and removed in the same financial year in which they were acquired, would the above statement apply ? Or is it applicable only if capital goods are removed in the same financial year without being used.

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2 Replies

Azim Khan ACA,CS,CMA*,LLB* (Proprietor) (1312 Points)
Replied 19 July 2013

Capital Goods removed as such means CG is removed from the factory without being put to use. (Whether Disposal or CG is not suitable for intended use)

According to Rule 4(2), assessee is authorised to avail the full CC on CG if the CG is removed as such in the first financial year. Therefore Rule 3(5) clearly says in this situation if CG is removed as such in the first financial year, avail the balance cc on CG and then reverse 100% cc so availed (This is because in the first financial year, max 50% of cc on GC can be claimed, other than SSI Unit)

If the CG is removed after being used, 2.5% per quarter or part (other than computer and peripherals) can be retained from the amount of cc availed (from the date of availment of cc and not the date of receipt of CG in the factory) and balance shall be reversed.

Hope this is clear..

Regards

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