ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 22.09.2025
CESTAT Chandigarh – No CENVAT Reversal Required on Written-Off Inventoryโ
This Article has been written by Shri Ravi Shekhar Jha, Advocate based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.
In a significant ruling, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Chandigarh, recently delivered its judgment in the case of M/s Delta Energy Systems India Pvt. Ltd. vs. Commissioner of Central Excise, Delhi-III. โ This case revolved around the reversal of CENVAT credit on obsolete inventory and the invocation of the extended period of limitation by the Department. โ The Tribunal’s decision, pronounced on 18th September 2025, provides clarity on key issues related to CENVAT credit and procedural compliance.
Background of the Case
M/s Delta Energy Systems India Pvt. โ Ltd., engaged in the manufacturing of Power Rectifier Systems and UPS Systems, as well as trading in franking machines, EPABX, and modems, faced a demand from the Central Excise Department. โ The demand arose after an audit revealed that the company had written off obsolete inventory worth โน3,51,88,130 in its financial statements for the year ending 31st March 2007. โ The Department alleged that the company was required to reverse the CENVAT credit availed on the written-off inventory. โ
The company contended that it had separate divisions for manufacturing and trading, with distinct records maintained for each. โ It argued that no CENVAT credit was availed on the traded inventory, and for the manufacturing inventory, the applicable duty had already been reversed in 2005. โ Despite this, the Department issued a show cause notice on 8th October 2010, invoking the extended period of limitation.
Source: CESTAT Chandigarh
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