Devaluation of inventory

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Querist : Anonymous

Querist : Anonymous (Querist)

20 October 2011 What are the implications of devaluation of inventory in the Books of Accounts in terms of CENVAT?

U S Sharma

U S Sharma (Expert)
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22 October 2011 reason for devaluation?
if destruction then input credit should be reversed.

S.P.Mahanta

S.P.Mahanta (Expert)
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31 October 2011 If inputs or capital goods before use are written off,equivalent value of cenvat credit availed to be reversed. This is as per rule 3(5B) of CCR'2004.In case inputs or capital goods before use get destroyed by fire or any other unavoidable causes and value of inventory is reduced to extent lost, value of cenvat credit earlier availed to be reversed.Rule 21 of central excise rules 2002.

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Querist : Anonymous

Querist : Anonymous (Querist)

07 November 2011 What happens if inventory exists physically in terms of quantities but valuation thereof reduced ? Dowe still have to reverse the CENVAT Credit availed?
Similarly,if the inputs are used in manufacturing and goods exported either without payment of duty or for which rebate claims are filed,what happens to the CENVAT Credit availed?

U S Sharma

U S Sharma (Expert)
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08 November 2011 when goods(inputs) are cleared from the factory, then its not devaluation, its business loss, and in this case no impact on duty,

in case of capital goods, SLM depriciation method is applied,

in case of export of such goods, no such obligations, coz the transactions are covered with ARE-1 and submitted to department