2022 (4) TMI 1359

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....a Siel') for supply of final products. In terms of Clause 22 of the Agreement, in case of termination of production of any product (vehicle), the Appellant is required to continue supplying replacement parts for 15 years from date of discontinuation termination of product. In terms of the aforesaid, the Appellant maintained following two types of inventories:- - Mass production inventory for use in production of final products; and - Spare Parts Division ('SPD') inventory for replacement parts to be supplied to Honda Siel. 3. During 2011 to 2017, due to lower production at Honda Siel, SPD inventory moved slowly as compared to mass production inventory. Consequently, as advised by statutory auditors, the Appe....

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....gned Order, holding that in terms of Rule 3(5B) of the Credit Rules, provision for slow moving inventory made to write off their value in books of account require reversal of Cenvat credit on the said inputs. Aggrieved by the impugned Order, Appellant have filed appeal before this Hon'ble Tribunal on the following grounds. Rule 3(5B) is not applicable to the facts of the present case 6. It is urged, in terms of Rule 3(5B) of the Credit Rules, Cenvat credit is required to be reversed wherein provision is made to write off an inventory fully or partially. Writing-off is done wherein an asset has ceased to have any value or would fetch negligible monetary benefit or where it is anticipated that its future value may be reduced or beco....

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....E Dehradun [2019 (369) ELT 670 (Tri. - Del.)]. BCH Electric Ltd. v. CCE Faridabad [2016 (344) ELT 469 (Tri.- Chennai)]. Entire demand is revenue neutral 10. Proviso to Rule 3(5B) of the Credit Rules provides that in cases where inputs are subsequently used in manufacture of final product, an assessee is entitled to avail recredit of the same. Hence, even if the Appellant would have reversed credit, it was entitled to re-credit the same on subsequent use of such inputs. Hence, the entire exercise is revenue neutral. 11. Learned Authorised Representative for the Revenue, relies on the impugned order. 12. As submitted above, inventory was never written off in books of accounts and provision of slow-moving inventory was fur....