Cenvat credit on fire-destroyed inputs need not be reversed absent a specific statutory reversal provision

Cenvat credit validly taken on inputs received in factory does not become reversible merely because the inputs or manufactured goods are destroyed in fire, absent a specific statutory requirement for reversal. The absence of one-to-one co-relation between inputs and final products does not defeat credit, and remission provisions for destroyed goods do not create a separate reversal obligation; the principle of indefeasible credit applies where no insurance compensation was received. The Tribunal was also held to have passed a speaking order because reasons supported its conclusion.

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Issues: (i) Whether Cenvat credit availed on inputs destroyed in fire is liable to reversal in the absence of one-to-one co-relation between inputs and final products. (ii) Whether the Tribunal passed a speaking order.

Issue (i): Whether Cenvat credit availed on inputs destroyed in fire is liable to reversal in the absence of one-to-one co-relation between inputs and final products.

Analysis: Credit on inputs is admissible when the inputs are received in the factory, and the scheme does not provide for reversal merely because the inputs or the goods manufactured from them are later destroyed by fire. The rules governing remission of duty deal with destruction of goods, but do not create a separate obligation to reverse validly taken credit on inputs. The absence of one-to-one co-relation does not alter the entitlement to credit, and the principle of indefeasible credit applies where the credit was lawfully taken and no insurance compensation has been received.

Conclusion: The issue is decided in favour of the assessee. Reversal of Cenvat credit on inputs destroyed in fire was not warranted.

Issue (ii): Whether the Tribunal passed a speaking order.

Analysis: The Tribunal's order was examined and found to contain reasons supporting its conclusion, rather than being a bare or non-speaking disposal.

Conclusion: The issue is decided against the Revenue. The Tribunal passed a speaking order.

Final Conclusion: The appeal succeeded, the questions of law were answered for the assessee, and the Tribunal's order was set aside.

Ratio Decidendi: Validly availed credit on inputs does not become reversible merely because the inputs or the resulting goods are destroyed by fire, absent a specific statutory provision requiring such reversal.

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