Cenvat credit reversal requires book write-off or equivalent provision; stored inputs were not enough to trigger reversal.

Rule 3(5B) of the Cenvat Credit Rules, 2004 applies only when the value of inputs or goods is fully or partly written off in the books of account, or a provision for such write-off is made. As the iron ore pellets and fines were not written off and were still lying in the factory premises, the statutory condition for reversal of Cenvat credit was not met. The alleged treatment as waste did not, on these facts, justify reversal of credit. Rule 3(5B) was therefore not attracted and the Revenue's appeal failed.

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Issues: Whether Rule 3(5B) of the Cenvat Credit Rules, 2004 required reversal of Cenvat credit on iron ore pellets and fines alleged to have been written off or removed as waste.

Analysis: Rule 3(5B) applies only where the value of inputs or goods has been fully or partially written off in the books of account, or where a provision for such write-off has been made. On the facts found, the pellets and fines were not written off in the books and were still lying in the factory premises. In the absence of write-off or removal of the inputs in the manner contemplated by the rule, the statutory condition for reversal of credit was not satisfied. The alleged waste also did not justify demand of reversal in these circumstances.

Conclusion: Rule 3(5B) of the Cenvat Credit Rules, 2004 was not attracted, and the Revenue's appeal failed.

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