when we sell the capital goods after using it, there is the discussion of Reversal of CENVAT credit on Removal. I know this. I have the query on some basics. Why excise duty is charged again on sale of used machinery ? I know that we can use the benefit of e.d. paid on the bought machinery but why is this concept at all since ed should not be paid on sale on used machinery since there is no manufacture.
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Used capital goods sold
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Capital goods are used for manufacturing final product and the benefit of 50% cenvat is given in first year bcs capital goods gives its services over a period of time and they are supposed to be used till its value gets depreciated. If we sales it as second hand capital goods.the benefit of cenvat is to be given back
You never pay Excise Duty on sale of used capital goods. Rule 3 of CENVAT Credit Rules, 2004 requires one to pay "an amount" equivalent to CENVAT credit availed on used capital goods after deducting applicable depreciation rate.
Thanks for correcting Shravana. But is there any rule in excise in which I can charge ed on sale of used cap goods. Same question applies for goods sold as such (without use). In that case also can i recover ed on sale of cap goods.
its due to the process of of removal of excisable goods on which duty is paid or credit taken :)
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if department claim you to pay duy 100% as on removal of inputs are done, would it be justified ?
so by every year they put a depricialtion rate, which is reduced from duty payable .
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