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Sale of Equipment by Service Provider

Sushma Mevacha (Executive) (394 Points)

12 March 2011

Service Provider “A” purchased a Loader in F.Y. 2008-09 & used the same in providing the out put services. Now “A” wants to sale the Loader & he availed the Depreciation of excise duty @ 2.5% per quarter & paid the excise duty. ( By cenvat Credit & rest y Cash – PLA). “A” is already registered in Excise as First stage dealer.

Now my query is though “A” is a service provider, he can raise the Excise Invoice? If No, Please specify the procedure?

And If “A” can raise the Excise Invoice, can a buyer take credit of the duty?

Regards

Sushma Mevacha

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5 Replies

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 12 March 2011

A can sell the loader on his commercial invoice,

for duty payment and adjustment he has to approach to R/O with details of sales, if the buyer wants to avail the credit then A has to obtain the R/C no of buyer and ask R/O to issue a certificate of duty reversal/ payment by A in favor of buyer.

A can annexe the certificate with invoice and buyer can take credit on the basis of this certificate.

Pankaj Arora (Learner) (3134 Points)
Replied 12 March 2011

A Can raise an excise invoice since A is register in central excise as first stage dealer.... but buyer can not take credit of that duty..

CA CS Akashdeep Singh (Practicing CA) (1394 Points)
Replied 12 March 2011

II Proviso of Rule 3 (5) of Cenvat Credit Rules, 2004

"Provided further that if the capital goods, on which CENVAT Credit has been taken, are removed after being used, the manufacturer or provider of output services shall pay an amount equal to the CENVAT Credit taken on the said capital goods reduced by the percentage points calculated by straight line method as specified below for each quarter of a year or part thereof from the date of taking the CENVAT Credit, namely:-(a) for computers and computer peripherals:

(i) for each quarter in the first year @ 10%

(ii) for each quarter in the second year @ 8%

(iii) for each quarter in the third year @ 5%

(iv) for each quarter in the fourth and fifth year @ 1%

(b) for capital goods, other than computers and computer peripherals @ 2.5% for each quarter."

Now my query is though “A” is a service provider, he can raise the Excise Invoice? If No, Please specify the procedure?

No, you need not to issue excise invoice, just issue service tax invoice.

And If “A” can raise the Excise Invoice, can a buyer take credit of the duty?

A will issue service tax invoice and buyer can cenvat on the basis of such invoice.

CA Ketan Kothari (Associate Consultant) (86 Points)
Replied 18 March 2011

Originally posted by : Pankaj Arora
	A Can raise an excise invoice since A is register in central excise as first stage dealer.... but buyer can not take credit of that duty..