Excise Duty Impact on Non Moving / Slow Moving Inventory

HS Negi (Senior Executive- F&A) (590 Points)

20 March 2010  

Dear All

I wish to share with you that we make the provision for non moving / slow moving inventory as per accounting policy of the company to know which items are non moving / slow moving this year so that management can focus on those inventory for the movement. It does not mean that these are obselete or out of fashion. These inventory are in goods position and lying in the stock of the company. We are doing this as prescribed in the books of standard of Accounting -1 (AS-1) in view to represent fair and neat picture of financial impact. 

Now Rule 3(5B) of Cenvat Credit Rules 2004 says that if any provision made for write of fully or any provision for write off fully made then cenvat credit so availed should be reversed. Where I think that write of fully means that inventory which is out of fashion or not fit for use. Whereas our inventory is in good position and are still capable for use in the manufacture of final products.

Now my querry is, are there any requirement to reverse the cenavat credit aviled on the basis of provision made on non moving / slow moving inventory.

Please suggest me with relevant authority.


Harendra Singh Negi