Slow-moving inventory provision was not a full write-off, so CENVAT credit reversal under Rule 3(5B) was prima facie inapplicable.

Provision made for slow or non-moving inventory was not, prima facie, a full write off where the inventory value had not been fully written off and a substantial quantity of inputs was later retrieved for manufacture. On the material available at the stay stage, the goods remained capable of use, so Rule 3(5B) of the CENVAT Credit Rules, 2004 was not, prima facie, attracted. The appellants were therefore granted waiver of pre-deposit and stay of recovery.

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Issues: Whether the provision made for slow or non-moving inventory amounted to a full write off so as to attract Rule 3(5B) of the CENVAT Credit Rules, 2004.

Analysis: The appellants had not fully written off the inventory value and had subsequently retrieved a substantial quantity of the inputs for manufacture. On the material placed at the stay stage, this indicated that the goods were capable of use and the provision could not, prima facie, be treated as a full write off falling within Rule 3(5B).

Conclusion: The provision was not, prima facie, a full write off attracting reversal under Rule 3(5B), and the appellants were entitled to waiver of pre-deposit and stay of recovery.

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