Case Law Details
Takata India Pvt. Limited Vs Commissioner of Central Excise (CESTAT Delhi)
CESTAT held that the appellant have only created a general provision for slow-moving inventory and have actually not written off the inventory from the inventory or the asset account. In actuality such provision have been made by appropriation in the profit and loss account, without writing off any amount from the assets / inventory account. Rule 3(5B) of the Cenvat Credit Rules is attracted only when the provision for slow-moving inventory or wherein any specific provision to write off fully or partially has been made in the books of account. In the facts of the present case, the appellant have made a general provision, which is not attributable to any particular assets / inventory. Admittedly, Revenue has not been Ex. A. No. 50817 of 2020-SM able to identify the details of inventory or asset, for which the general provision has been made. It is further evident that appellant have led evidence that such provision has been varied from year to year by way of writing back, on the usage of the inventory as required. I also find that the situation is revenue neutral as the appellant have written off the majority of the provision created on utilisation of the inventory in manufacturing and clearance of finished goods.
FULL TEXT OF THE CESTAT DELHI ORDER
The appellant is inter alia engaged in manufacture of automotive parts namely cap body cover, module assembly, seat belt assembly etc.
2. The Appellant entered into an Agreement dated 09.05.2008 with M/s Honda Siel Cars (India) Limited (‘Honda Siel’) for supply of final products. In terms of Clause 22 of the Agreement, in case of termination of production of any product (vehicle), the Appellant is required to continue supplying replacement parts for 15 Ex. A. No. 50817 of 2020-SM years from date of discontinuation termination of product. In terms of the aforesaid, the Appellant maintained following two types of inventories:-
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