CENVAT credit on written-off inputs remains available when receipt and use in manufacture are established.

CENVAT credit on inputs could not be denied merely because their value was written off in the assessee's books, where the record showed that the inputs were actually received and used in manufacture. The write-off was treated as relating only to amounts payable to suppliers and not as evidence of destruction, non-use, or unusability of the inputs. As no finding was recorded that the inputs were not received or not consumed in the manufacturing process, the statutory condition for credit remained satisfied and denial of credit was unsustainable.

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Issues: Whether CENVAT credit on inputs was admissible when the value of those inputs had been written off in the assessee's books of account.

Analysis: The assessee's case was that the credit related to inputs actually received and used in the manufacture of finished goods, and that the write-off reflected only the amount payable to suppliers, not any destruction, non-use, or unusability of the inputs. The material on record showed that the relevant invoices and ledger entries were scrutinised, but no finding was recorded that the inputs were not received or not used in manufacture. In these circumstances, the mere write-off of value in the books did not furnish a basis to deny credit where the statutory condition of receipt and use of inputs stood satisfied.

Conclusion: The denial of CENVAT credit was unsustainable and the issue was decided in favour of the assessee.

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