Cenvat credit on written-off inputs remains admissible when goods are physically available and continue to be used.

Cenvat credit on slow-moving or non-moving inputs could not be denied merely because a provision was made in the balance sheet, where the inputs remained physically available in the factory and were shown as being used. The determinative test was whether the inputs had actually been scrapped, discarded, or removed from inventory; no such finding was recorded. As the assessee produced consumption details showing continued use, the accounting write-off alone did not establish that the goods had ceased to exist in stock. Credit was therefore admissible and the disallowance was unsustainable.

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Issues: Whether Cenvat credit on slow-moving or non-moving inputs could be denied merely because a provision had been made in the balance sheet for such items, when the inputs remained physically available in the factory and were being used.

Analysis: The availability of credit turned on whether the inputs had actually been scrapped, discarded, or removed from inventory. The record contained no finding that the inputs were written off and also physically discarded. On the contrary, the assessee had produced consumption details showing continued use of the disputed inputs, and the mere accounting entry in the balance sheet could not by itself establish that the inputs had become unusable or had ceased to exist in stock. In these circumstances, the reasoning applied in the cited precedent governing written-off but physically available inputs squarely covered the case.

Conclusion: Cenvat credit could not be denied on the basis of the balance-sheet provision alone, and the disallowance was unsustainable in favour of the assessee.

Ratio Decidendi: A mere write-off of inputs in accounts does not justify denial of Cenvat credit unless the inputs are actually scrapped, discarded, or otherwise shown to have left inventory; physical availability and subsequent use support admissibility of credit.

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