2005 (1) TMI 275 - AT - Central Excise

Tribunal grants Modvat credit appeal on inputs written off in balance sheet, stresses availability for eligibility.

ASHOK LEYLAND Versus COMMISSIONER OF CENTRAL EXCISE, CHENNAI

The Tribunal allowed the appellant's appeal regarding the disallowance of Modvat credit for inputs written off in the balance sheet. The decision was in ... Cenvat/Modvat - Inputs Issues:1. Disallowance of Modvat credit for inputs written off in the balance sheet.Analysis:The appellant, a manufacturer of automobiles, availed Modvat credit for inputs used in manufacturing automobiles. The credit was disallowed as certain inputs were written off in the balance sheet. The appellant contended that the inputs were still in stock, and denial of credit should not apply. They relied on a previous Tribunal decision in a similar case.The appellant argued that the mere writing off of inputs in the balance sheet should not lead to the reversal of credit if the inputs are still in stock. The Revenue pointed out that if inputs were removed as obsolete, the credit would need to be returned. The appellant's counsel provided a certificate from a Chartered Accountant dated 10-1-2005 stating that the inputs in question were still in stock.The Tribunal found that since the inputs were available with the appellant, the decision in the previous case cited by the appellant applied. The appeal was allowed, and the impugned order was set aside. However, the Tribunal clarified that the Revenue could raise a fresh demand if the inputs were removed or not available in the future.In conclusion, the Tribunal's decision favored the appellant as the inputs in question were still in stock, aligning with the precedent set in a similar case. The importance of the actual availability of inputs in determining the eligibility for Modvat credit was highlighted, and the Revenue was given the option to raise a new demand if circumstances changed regarding the inputs.