Reversal of CENVAT credit on transfer of capital goods

Dear All,

             I have some confusion about reversal of CENVAT CREDIT on Transfer of capital goods. Whether we have to reverse whole cevat credit on transfer/sale  of capital goods even after we have used the machinary for 7-8years . If not please provide the suggations. The transfer of capital goods is within the same group located in different places and the unit from which transfering will be done has no sufficient cenvat credit to reverse and didnot want to pay through cash/bank. Please suggest.

             

Replies (3)

U do not need to reverse the whole credit... Amount of reversal is Cenvat credit taken reduced by 2.5% for each quarter of a year or part thereof frm date of taking credit.. It seems frm your case that u only have to reverse 20% or 30% credit depending on when machinery was purchased and credit taken...

Regarding ur second query please give some more details like, are u shifting factory? is it transfer between branches or depots or Between seperate companies but under same management.. ?

If u dont want to pay through bank then this situation is not permanently avoidable... If by whatever mean u show removal at lesser price to other Related party, u may avoid bank payment at this stage but receiving party will similarly receive less Cenvat Credit and thus, when it will remove it has to pay through bank or cheque at that time..

Whether Cevat  credit  taken on capital goods reversable on sale of capital goods ?

In case of Sale of all assets of the business including mavhinery already installed on the factory land & building sold out ? Is it applicable ? You see the owenership is being changed but none of the fixed assets moved therefrom. 

Subhashchandra G.Barad

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