TaxTMI 
TaxTMI 
2021 (8) TMI 935
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....made provision in the books of accounts on account of Non-Moving Inventory, without reducing the value of inventory. 2. The appellant is engaged, inter alia, in the manufacture of Lead and Zinc Concentrates falling under Chapter 26 of the First Schedule to the Central Excise Tariff Act, 1985 and is also availing Cenvat Credit on various inputs, capital goods and input services in terms of the provisions of the Cenvat Credit Rules, 2004 (Credit Rules). 3. The appellant had made provision in the books of accounts in respect of non/slow moving inventory, as a managerial tool to take decision for maintaining lowest possible inventory stock. The aforesaid entry (provision from profit) in the books of account does not change the valu....
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....f accounting. The value of inventory in the store ledger is kept at full value, and on consumption of the inventory, the cost is booked at full value. It is lump sum provision, where management is called to provide for inventory, which are not getting frequently used in the course of manufacture, but are used at a lower rate/pace. This helps in managerial decision making to keep the lower possible inventory of stock. Further, such NMI are not obsolete, which can be termed as not usable in the process, and the provision on inventories are renewed on regular basis or monthly basis. In case, when some inventories are found unuseable, then the management's approval is obtained for write off, and accordingly cenvat credit is reversed. It is, the....
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....sp; Rs. 9,69,666/- 6. Accordingly, the show cause notice demanded reversal of cenvat credit, as aforementioned with proposal to impose interest and penalty. 7. The appellant contested the show cause notice, inter alia, submitting that the appellant was not required to reverse the cenvat credit as the value of the inventory has not been written off. Further, it has been erroneously assumed by the Revenue that the provisions made for non/slow-moving inventory is equal to write off of the inventory. Such non/slow-moving inventory are not obsolete. Further, admittedly, the appellant has kept the inventory in their 'price store ledger' at full value and upon consumption, in regular course of business, the cost of inventory is ....
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....terating the grounds taken before the court below demonstrates before me, with respect to para-6 of the show cause notice by producing the extract of the trial balance, relevant extract of ledger account, extract of the expenditure ledger, screen shot of the sample journal voucher for the provision made on 1.5.2017, and reversal of the same provision on 1.6.2017.Thus, the appellant under the accounting principles of conservation creates the provision at the end of each month and reverses the said provisions on the first day of the next month. It is further demonstrated that the amount of Rs. 57,52,999/- is a credit balance of 'store and spare reserve' for the financial year 2016-2017 taken from the Trial balance as on 31.03.2017, whereas th....