Treatment on sale of capital goods

Hey,

If a company (Manufacturing entity) make/manufacture a capital goods in house by purchasing required material and later on sale it.

So question is:

  1. What is treatment of input excise duty on purchase of raw material duty use in manufacture of capital goods. Is it will claim in same manner as capital goods 50% in a year or it will claim as purchase of input material and claim 100% credit in same year.
  2.  What is treatment on sale of capital goods which company manufacture in house (as mentioned above). Is excise duty is leviable on sale of that capital goods or not. what kind of invoice is to be raised on sale of capital goods.
Replies (3)

Ans 1: 100% input you can avail, because raw material purchase for manufacturing purpose.

Ans 2: The newly substituted Rule 3(5A) (a) provides 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:-

for computers and computer peripherals:

for each quarter in the first year @ 10% ;

for each quarter in the second year @ 8%

for each quarter in the third year @ 5%;

for each quarter in the fourth and fifth year @ 1%;

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

The proviso to this rule provides that if the amount so calculated is less than the amount equal to the duty leviable on transaction value, the amount to be paid shall be equal to the duty leviable on transaction value.

 

Rule 3(5A)(b) provides that If the capital goods are cleared as waste and scrap, the manufacturer shall pay an amount equal to the duty leviable on transaction value.

From the newly substituted rule it can be inferred that reversal of excise duty is applicable only to the manufacturer.  The service provider is not required to reverse the excise duty on sale of scrap/waste with effect from 27.03.2013.

Thanks........

Can company charge excise duty on invoice and recover from customer while sale of capital goods in above case.

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