Duty payable on removal of capital goods
As per Rule 2 (a) of the Cenvat Credit Rules, 2004 refractory materials used in the factory of the manufacturer of final products qualify as capital goods. Rule 3(5A) of the credit rules which provides for reversal of Cenvat credit on removal of capital goods after being used has been amended to provide that where capital goods on which Cenvat credit has been taken are removed after being used (whether as capital goods or as scrap or waste), the manufacturer is required to pay an amount equal to the Cenvat credit taken on the said capital goods reduced by prescribed percentage for each quarter or excise duty payable on the transaction value, whichever is higher.
Prior to the amendment, Rule 3(5A) provided that if capital goods are removed as waste and scrap, the manufacturer would be liable to pay an amount equal to the duty
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