2007 (11) TMI 473 - AT - Central Excise

CENVAT credit - inputs, which were written off by the respondent as being unusable due to the reason that such spares were obsolete - Held that - the Revenue has not produced any evidence that the said inputs/capital goods are not in the factory and nor there is any evidence to show that the said goods will not be used in future - credit need not be reversed - appeal dismissed - decided against Revenue.

Summary

Issues:
- Appeal against Order-in-Appeal regarding duty demand on written-off spares.
- Whether written-off spares can be considered for duty credit.
- Interpretation of the value of spares written off in books of accounts.
- Application of relevant judgments and Board Circular in the case.

Analysis:
1. The appeal was filed against the Order-in-Appeal concerning the demand of duty on spares written off by the respondent. Despite no representation from the respondent, the appeal was considered for disposal due to the narrow compass of the issue involved.

2. The core issue revolved around the duty demand on spares written off by the respondent as obsolete. The respondent argued that although the spares were written off in the books of accounts, they were physically available and some were subsequently used. The Commissioner (Appeals) accepted this contention, emphasizing that the spares were still capable of use and physically present in the factory premises.

3. The Commissioner's findings highlighted that the writing off of spares in the inventory was for accounting purposes only, and there was no evidence to suggest that the spares were not available or would not be used in the future. The absence of contrary evidence led to the decision in favor of the respondent, citing precedents like the case of Bharat Heavy Electricals Ltd. v. CCE, Bangalore, and other relevant judgments.

4. The judgment emphasized that the Board Circular, while binding on the revenue, was outweighed by judicial pronouncements favoring the respondent on identical issues. Consequently, the appeal filed by the Revenue was rejected, affirming the correctness of the impugned order and the application of relevant legal precedents in determining the duty demand on written-off spares.