CBEC circular on CENVAT credit

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Its common amongst the manufacturers to write off the value inputs and capital goods in the books of accounts, when they get obsolete, non-moving etc.

 

But manufacturers used to exploit this situation to their own benefit by w/o the value of stock in the books and still availing the CENVAT credit under excise.

 

To counter this, earlier this year Rule 3(5B) was added to the CENVAT Credit Rules, 2004. The provision read:

“that writing off the value of inputs and capital goods before putting them to use would entail reversal of the full Credit taken on them and that subsequent use of the inputs or capital goods would enable taking the Credit again”

 

The Circular No. 907/27/2009-CX dated December 7, 2009 also iterates the same position.

Replies (1)

It maybe noted that writing off  lead to reversal not writing down. Many companies write down the value , in which case there would be no reversal required.is


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