Availment of Cenvat credit previously written off

[chaganti srinivas]

Dear Sirs, We have debited Rs.7lacs approx. towards cenvat amount involved in the semi finished material written off from books as per the audit instructions. Can i take back the cenvat amount proprotionately as and when i started using the same for further process/manufacturing.

[Surender Gupta]

Yes, you can take the credit of reversed amount when you start using the material subsequently - read the provision to rule 3(5B) of the cenvat credit rules, 2004 which states that, "Provided that if the said input or capital goods is subsequently used in the manufacture of final products or the provision of taxable services, the manufacturer or output service provider, as the case may be, shall be entitled to take the credit of the amount equivalent to the CENVAT credit paid earlier subject to the other provisions of these rules."

AI Summary

Cenvat credit restoration allowed when written-off inputs are later used in manufacture, subject to rule-based conditions. A manufacturer may restore Cenvat credit previously debited/written off when the input or capital goods are subsequently used in manufacture of final products or provision of taxable services, subject to entitlement conditions and other provisions of the Cenvat Credit Rules, including proportionate allocation where applicable.