Taking credit and then reversing the same entry is as good as not taking the credit at all

Last updated: 25 November 2021

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Quick Summary

The Allahabad CESTAT ruled that when a manufacturer produces both dutiable and exempted goods, and it's impractical to keep separate accounts for common inputs, reversing Cenvat credit entries is a valid accounting method. This approach is considered equivalent to not taking the credit in the first place. The tribunal acknowledged the difficulty in tracking input usage for mixed production lines.

Court :
CESTAT, Allahabad

Brief :
In M/s Hamdard (Wakf) Laboratories v. Commissioner of Customs, Central Excise & Service Tax [Order No. 70247-70248/2021 dated November 5, 2021] Allahabad Bench of Customs, Excise and Service Tax Appellate Tribunal ("CESTAT") held that in a case where the assessee is a manufacturer of dutiable goods as well as exempted goods and it is impractical to maintain separate accounts of common inputs used in manufacture of dutiable goods and exempted goods the only practical way of maintaining accounts is by corresponding credit and debit entries, reversing proportionate amount of cenvat credit

Citation :
Order No. 70247-70248/2021 dated November 5, 2021

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1 Year PLAN

1999

(Excl. of GST ₹359)

2 Years PLAN

3499

(Excl. of GST ₹629)

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3 Years PLAN

4999

(Excl. of GST ₹899)

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Judgement posted by

Bimal Jain

Service

FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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