Home Case Index All Cases Central Excise Central Excise + AT Central Excise - 2022 (3) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (3) TMI 916 - AT - Central ExciseReversal of CENVAT Credit - creation of provisions in the balance sheet for the old and slow-moving inputs during the period 2007 – 08, 2008 – 09 and 2009 – 2010 (upto August 2009) - non-reversal of CENVAT credit in relation to these provisions so made in the balance sheet - Rule 3 (5B) of CENVAT Credit Rules, 2004 - HELD THAT:- From Rule 3 (5B) which was introduced with effect from 11.5.2007 and also the amendment brought forth with effect from 1.3.2011, it can be seen that credit has to be reversed even if partially written off for the period prior to 1.3.2011. The Rule was introduced in 2007 and then the requirement was to reverse credit when fully written off. In the present case, the department does not allege that the appellant has fully written off the value of inputs. It is merely alleged that the appellant has created ‘a provision’ for the old and slow-moving inventory. In the Show Cause Notice, it is not at all alleged that the appellant has fully written off the value of inputs. The method adopted by the appellant is more akin to partially writing off the value of inputs. The rule requiring reversal of credit even when there is partial write off of the value of the inventory has come into application only after the amendment with effect from 1.3.2011. On perusal of the balance sheet, it can be seen that the appellant has not fully written off the value of inventory - It is very evident from the balance sheet that the value of the inputs has not been fully written off. In such circumstances, Rule 3(5)(B) does not apply for the disputed period. The Tribunal in the case of M/S. SANGHAVI ENGINEERING VERSUS CCE, HYDERABAD [2012 (7) TMI 821 - CESTAT BANGALORE] as well as M/S. KIRLOSKAR FERROUS INDUSTRIES LTD. VERSUS COMMISSIONER OF CENTRAL TAX AND CENTRAL EXCISE, BELGAUM [2018 (11) TMI 348 - CESTAT BANGALORE] had occasion to analyse the very same issue and has held that the requirement of reversal of credit when the value has been partially written off would take effect only after 1.3.2011. The demand cannot sustain - Appeal allowed - decided in favor of appellant.
|