TaxTMI 
TaxTMI 
2015 (1) TMI 30
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....at credit Rules, 2004. The appellant had taken Cenvat credit in respect of certain items of spares of capital goods. In December, 2006, the appellant made a provision for writing of the slow moving capital goods spares valued at Rs. 54,07,263/-involving duty of Rs. 8,82,465/-. On 11.5.07, by notification no. 26/07 CE (NT) sub-rule 5B was added to Rule 3 of the Cenvat Credit Rules, 2004 which provided that if the value of any inputs or capital goods before being put to use and on which Cenvat credit has been taken, is written off fully or where any provision to write off fully has been made in the books of accounts, then the manufacturer shall pay an amount equivalent to the Cenvat credit taken in respect of the said input or capital goods. ....
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....e same was dismissed vide order-in-appeal dated 19.2.13. Against this order of the Commissioner (Appeals), this appeal has been filed. 2. Heard both sides. 3. Shri R. Murlidharan, learned consultant for the appellant, pleaded that the provision for writing off the obsolete spares parts valued at Rs. 54,07,262/- and involving Cenvat Credit of Rs. 8,82,465/- had been made in December, 2006; that this provision was not for full writing off but for partial writing off, that this provision, of partial writing off was carried forward from year to year and revised when the spares were consumed; that up to 31.3.11, the provision for writing off had been revised by Rs. 10,63,934/-; that at the time when the provisions for writing of slow movin....
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...., was made in December, 2006, it was carried forward through year to year and therefore the appellant should have reversed the Cenvat credit when they carried forward provision for writing off certain spares initially made in December 2006, in subsequent financial years. With regard to Tribunal's judgment in the case of Phillips Electronics India Ltd . cited by learned Counsel for the appellant, she pleaded that this judgment is in respect of obsolete inputs which has been written off in the financial accounts; that writing off of obsolete/slow moving inputs/spares and making the provision for writing off of obsolete/slow moving inputs/spars are different, as while the writing off of some inputs or capital goods in a financial year is n....
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....of some input or capital goods a one time affair, provision for writing off of some inputs or capital goods made in a financial year is carried forward to next financial years is reviewed from time to time. According to the contention of the learned DR, while at time making provision for writing off in December, 2006, there was no requirement for reversal of the Cenvat credit, when this provision for writing off was carried forward in subsequent years which amounts to making a fresh provision for writing off, the requirement of Cenvat credit reversal in form of Rule 3(5B) had come into force. I agree with this plea of learned DR, as the writing of inputs/ capital goods and making provision for writing off of inputs/capital goods cannot be e....