TaxTMI 
TaxTMI 
2026 (8) TMI 1068
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.... neither the impugned raw materials were used in the manufacture of final product nor the value of the same including Excise Duty was paid to the suppliers of the Input/Raw Materials. The Rule 3(5B) of the CENVAT Credit Rules, 2004 explicitly envisages that if the value of any input on which CENVAT Credit has been taken is written off fully or partially or where provision to write off fully or partially has been made in books of accounts then the manufacturer shall pay an amount equivalent to the CENVAT Credit taken in respect of such Input. Therefore, the demand for reversal of the Cenvat of Rs. 37,49,348 for such written off accounts during the period 2013-14 to 2015-16, was made by issuing the SCN invoking the extended period provisions. After due process, the lower authorities confirmed the demand of Rs.37,49,348. Being aggrieved, the appellant is before the Tribunal. 2. The Ld. Chartered Accountant, appearing on behalf of the appellant makes the following submissions on merits and on account of time bar: 2.1 It is submitted that the Spot Memo dated 03-03-2015 as well as the Show Cause Notice has clearly stated that the Appellant has written off outstandings of certain Su....
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....nt shut down in FY 2013-14 - Currently in NCLT Proceedings; (iv) Ms. Maithan lspat Limited- Money held due to Inferior Quality of Material and thereafter plant shut down in FY 2015-16; (v) Ms. Neo Metaliks Limited - Dispute owing to price difference and amount of creditor balance of INR 34,047/- written off in books of accounts; and (vi) Ms. SRC Metaliks Limited- Money held due to Inferior Quality of Materia and thereafter company closed in FY 2012-13. 2.8 On perusal of Rule 3(5) of the CCR 2004, it is clear that if the inputs have been used in the manufacture of final products or the provision of taxable services, then the assessee is entitled to take the Cenvat credit paid on such inputs even if such value of such inputs have been written off in the books of accounts. 2.9 Further, it is most humbly submitted that the amount written off in the books of accounts pertains to company's liability against the suppliers of such raw materials, whereas the inputs have not been written off from the stocks of the company. The company has actually written off a portion of liability against such suppliers, which is not in contravention of the Rule 3(5B) of the....
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....Ltd. 2013-14 393,748 2 Sri Ganesh Sponge Iron (P) Ltd. 2013-14 21,73,610 3 Ramswarup Industries Limited 2013-14 68,93,779 4 Maithan Ispat Limited 2015-16 27,746 5 Neo Metaliks Limited 2015-16 34,047 6 SRC Metalicks Private Limited 2015-16 203,27,312 Total 2,98,50,242 7. The Audit team undertaking the verification has pointed out vide their Spot Memo dated 3.3.2015, that the appellant is required to reverse the Cenvat Credit in respect of the above written-off amounts at Sl No.1 to 3. 8. The Rule 3(5B) of the Cenvat Credit Rules 2004, reads as under: "If the value of any, (i) input, or (ii) capital goods before being put to use, on which Cenvat credit has been taken is written off fully or partially or where any provision to write off fully or partially has been made in the books of accounts then, the manufacturer or service provider, as the case may be, shall pay an amount equivalent to the CENVAT credit taken in respect of the said Input or capital goods; Provided that if the said input or capital goods is subsequently used in the manufacture of final products or the p....
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....ons for writing-off of the dues to the Vendors on account of various reasons [Para 2.7 (i) to (vi) above]. 11. We also find that the appellant has produced the Chartered Accountant's Certificate dated 07.01.2020, which is reproduced below: 12. From this Certificate, it is seen that the amounts in question were written off from the dues to the Vendors during the years under consideration. The CA has clearly stated the "goods in question were not written off from the books of account". When such a Certificate is issued by the CA, the same is required to be accepted unless the same is rebutted by factual evidence by the Revenue to show that the goods were also written off. This has not been done in this case. We find the CA's Certificate to be a proper documentary evidence produced by the appellant. Therefore, refusal of accept the CA's Certificate by the lower authority is not proper. 13. We have gone through some of the case laws on this issue, which are discussed below: Commissioner of C.EX. & CUS., AURANGABAD Vs J.L Morison (I) Ltd. [2008 (223) E.L.T. 625 (Tri.- Mumbai)] "The reduction of the price payable by the respondent to his supplier's due to the quality....
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....stands allowed on merits and the confirmed demand for the extended period is set aside on account of time-bar. 18. The appellant would be eligible for consequential relief, if any, as per law. (Pronounced in the open court on 18.08.2026) ============= Document 1SI No. Party Name 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 1 Jarkahand Sales Agencies Pvt Ltd - . 8,93,748 . . (3,93,748) . . 2 Sri Ganesh Sponge Iron Pvt Ltd 1,11,13,515 19.03,620 . . - (21,73,610) - . 3 Ramswarp Industris Ltd 4,73,23,785 - . . . 68.93,779) . - 4 Maithan Ispat Ltd . . - . . . 19.33,996 27,746 5 Neo Metalks Ltd - 3,02,17,253 68,82,720 . 26.87.651 9,17,39,070 1,52,97,446 (34.047 6 SRC Metalils Pvt Ltd 3,57,15,638 5,68,98,831 - . . . . 2.03.27.312 Negative Figure in Red denotes the Creditors being Witten of Document 2 CA AIN SARAOGI & CO. CHARTERED ACCOUNTANTS 1, Crooked Lane, Kolkata (WB) 700 069, India Ph: +91-33-22484130 | Mob .. 98361 84131 E: [email protected] | W: www.jainsaraogi.com TO WHOM IT MAY CONCERN On examination of Books of accounts and other records as produced before us by the Management of M/s East India Holdings Private Limited (CI....