CENVAT Credit on in Inputs Written Off - CBEC Clarifies
THE CBEC in a letter to the Chief Commissioner, LTU, Bangalore (with copies to all CCs) clarifies:-
On a harmonious analysis of the issue in the light of the intention behind the insertion of Rule 3(5B) in the CENVAT Credit Rules, and the provisions of the Circular No. dated 16.07.02, it is stated that the reversal of CENVAT credit availed on the unused inputs partially written off is required, if the inputs are not capable of use in the manufacture of finished goods.
Rule 3(5B) was inserted in the CENVAT Credit Rules with effect from 7.7.2009 and reads as,
(5B) 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 where any provision to write off fully has been made in the books of account, 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:
The Rule says, written off fully and the clarification states partially written off. And here is yet another clarification issued through a letter to a Chief Commissioner.
And who will decide that the inputs are not capable of use in the manufacture of finished goods.?
CBEC F. No. 267/141/2009-CX8 Dated: June 24, 2010