TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Join Channel
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: (i) Whether Cenvat or Modvat credit was recoverable merely because the value of inputs lying in stock was partially or fully written off in the annual balance sheets, without any removal from the factory, for periods prior to insertion of Rule 5B of the Cenvat Credit Rules, 2004; (ii) Whether the duty demand relating to 504 personal computers allegedly not accounted for was sustainable; (iii) Whether the duty demand on OMC computer systems supplied to the Department of Telecommunication could be sustained in the absence of records proving payment of differential duty.
Issue (i): Whether Cenvat or Modvat credit was recoverable merely because the value of inputs lying in stock was partially or fully written off in the annual balance sheets, without any removal from the factory, for periods prior to insertion of Rule 5B of the Cenvat Credit Rules, 2004.
Analysis: The demand was founded only on accounting write-downs made while preparing annual balance sheets under the inventory valuation practice and not on any clearance of inputs from the factory. The inputs remained available in the factory, and the credit taken at the time of receipt had been correctly availed under the scheme then in force. Prior to the insertion of Rule 5B on 11 May 2007, there was no provision requiring reversal of credit merely because the book value of inputs was reduced or written off, whether partially or fully, in the absence of removal. The accounting treatment under the Companies Act and accounting standards did not by itself create a duty liability under the excise credit regime.
Conclusion: The demand based on write-off of the value of inputs was not sustainable and was set aside in favour of the assessee.
Issue (ii): Whether the duty demand relating to 504 personal computers allegedly not accounted for was sustainable.
Analysis: The demand rested on an alleged discrepancy between annual accounts and the RG-1 record. The record before the Tribunal did not satisfactorily explain the discrepancy, and the appellant did not produce a reconciliation statement or the relevant registers so as to establish that the goods had been properly accounted for. On the material available, the claim of the assessee could not be accepted.
Conclusion: The demand relating to the 504 personal computers was upheld against the assessee.
Issue (iii): Whether the duty demand on OMC computer systems supplied to the Department of Telecommunication could be sustained in the absence of records proving payment of differential duty.
Analysis: The assessee asserted that differential duty had been paid on amended prices through the prescribed accounts and reflected in the returns, but the assertion was not supported by records sufficient to establish payment for each clearance. In the absence of documentary proof, the plea for acceptance of the claim could not be allowed.
Conclusion: The demand relating to the OMC computer systems was upheld against the assessee.
Final Conclusion: The appeal succeeded only in respect of the demand founded on balance-sheet write-off of inputs, while the remaining duty demands and the corresponding penalty were sustained.
Ratio Decidendi: Before insertion of Rule 5B of the Cenvat Credit Rules, 2004, mere partial or full write-off of inputs in accounts, without removal from the factory, did not require reversal of credit.
TaxTMI 
