CENVAT credit reversal on capital goods cleared as waste or scrap to be on ‘transaction value’

 

This Tax Alert summarizes the Notification no. 12/2013-CE (NT) dated 27 September 2013, issued by the Ministry of Finance, amending the CENVAT Credit Rules, 2004.

The said notification has amended Rule 3(5A) of the CENVAT Credit Rules, 2004 which provides for CENVAT credit reversal in the event of removal of capital goods after being used.

As per the amendment vide the said notification, a manufacturer would now be liable to pay an amount equal to the duty leviable on ‘transaction value’, instead of ‘depreciated value’,on the removal of capital goods as waste or scrap.