Writte off some SFG Material and transfer to scrap location, Central Excise

[Swapneswar muduli]

Dear Sir,

we write-off some stock like (SFG & R.M )and same items are transfer to scrap location. and when we clear the scrap from factory we paid Excise duty on that scrap.

So in this above case we need to pay Excise duty for the write off the SFG and R.M or not ?

Swapneswar Muduli

Posts / Replies

[Rajagopalan Ranganathan]

Sir,

If you remove SFG on payment of duty then you need not reverse the credit taken on inputs used in the manufacture of such SFG. In case of RM you should pay the duty on transaction value or the credit taken on such RM whichever is higher. You need not reverse the credit in view of write-off of SFG & RM since you are paying appropriate duty on their removal from your factory.

[YAGAY AND SUN]

Rule 3(5B) of the CENVAT Credit Rules, 2004, provides that if the value of any input on which Cenvat credit has been taken is written off fully in the books of accounts, then the manufacturer is required to reverse the credit taken on the said input.

For details please check Circular No. 907/27/2009-CX, dated 07.12.2009

[Ganeshan Kalyani]

I agree with the views of Sri Rajagopalan Sir. Thanks.