Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
Popular Search: cpt :: ACCOUNTING STANDARD :: ACCOUNTING STANDARDS :: Central Excise rule to resale the machines to a new company :: VAT RATES :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: list of goods taxed at 4% :: empanelment :: form 3cd :: articles on VAT and GST in India :: TDS :: TAX RATES - GOODS TAXABLE @ 4% :: VAT Audit :: due date for vat payment :: ARTICLES ON INPUT TAX CREDIT IN VAT
« Indirect Tax »
 Applicability of TDS provisions of section 194-I of the Income-tax Act, 1961 on lump sum lease premium paid for acquisition of long term lease-regarding
 CBDT seeks monthly data of disposed I-T appeals
 Further indirect tax may be levied in 2017
 India has to make its own tax law
 Centre warns against criticism of GST network
 Indirect tax collection jumps 26% in April-September, direct tax 9%
 Indirect Tax collections up
 Thank you note from income tax department
 Tax dept scanning IDS disclosures filed through post
 Poor management cause of financial pressure on Centre
 GST to have short-lived impact on inflation: RBI

A look at indirect tax intricacies
December, 25th 2009

We are a company engaged in organic chemicals manufacturing, which are covered under Chapter 29 of central excise tariff. In respect of these products, excise laws prescribe that repacking from bulk packs to retail packs shall amount to deemed manufacture and excise duty would be leviable on it.

As a business practice, our goods are transported to our factory in tankers/containers and thereon, offloaded into smaller drums at our warehouse. Please clarify whether such an activity would qualify as manufacture and, therefore, invite excise duty.

The Central Board of Excise & Customs (CBEC), in relation to goods covered under Chapter 29, has in a recent circular clarified that tankers/containers by which the goods are transported cannot be termed as bulk packs.

Therefore, the activity of transferring the goods from tankers into smaller drums would not amount to deemed manufacture under the excise laws. So, this activity would not invite excise duty.

Ours is an auto parts manufacturing company. We set up a factory in Ghaziabad 12 years ago and purchased certain machinery on payment of excise duty at that time. We had also availed the Modvat credit of duty paid on these machines.

We now wish to sell off these machines. In this regard, we understand that if capital goods are sold after being used, the amount of credit originally availed has to be paid/reversed, after reducing 2.5% for each quarter during which such goods were used.

However, as we would be selling the machines after using them for more than ten years, we understand that no reversal of credit would be required. Please advise.

As per the Cenvat Credit Rules, 2004, a deduction of Cenvat credit to the extent of 2.5% per quarter is available in respect of capital goods. This means that as per the rules, in case capital goods are used for more than ten years, 100% deduction of Cenvat credit would be available.

Accordingly, no reversal of credit would be required at the time of disposal of such goods. However, the CBEC has clarified that if capital goods are cleared as waste and scrap, excise duty would still be payable on the transaction value of such clearances.

Therefore, in your case, even though the Cenvat credit would not have to be reversed, excise duty may still have to be paid at the time these machines are sold.


Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - About Us

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions