As per Cenvat Credit rules, 2004 under Rule 3, sub rule 5A , for the removal of Capital goods after being used, on which CENVAT credit has been taken, manufacturer shall pay an amount equal to the CENVAT credit taken on the said capital goods reduced by the percentage notified by straight line method. My question is i have taken Rs. 1,20,000 as Cenvat credit in the year 2010. Value of the Machine was Rs. 10,00,000. If i want to remove the same in 2015, as per rule,from which value i should apply the straight line method? Is it for Rs. 1,20,000 or for Rs. 10,00,000.

Rightly the straight line method should apply for Rs.120000 the credit taken. The rule 3(5A) of CCR reads " shall pay an amount equal to cenvat credit taken on the said capital goods reduced by the percentage points calculated by straight line method".