CENVAT credit on inputs written off at the time of surrendering the Excise Registration Certificate is allowable as deduction u/s 37:

Assessee’s unit was an excisable unit. During the year under consideration, assessee had written off certain sum pertaining to excise duty by debiting the P&L account and the said sum was disallowed by AO. Hon’ble ITAT observed that Government had declared a scheme according to which the assessee was given an option to continue with the present rate of excise duty or to avail a route of exemption. Assessee opted for the exemption route, surrendered its Excise Registration Certificate and then wrote off the said sum that represented unutilized CENVAT credit availed on inputs as was evident from RG-23A Part II. Further, the purchase cost of input was debited net off CENVAT credit in the P&L account. It was held that such CENVAT credit on inputs was in respect of raw materials and hence, the claim of the assessee was wholly and exclusively for the purpose of its business. Hence, the impugned disallowance was deleted by the Hon’ble ITAT.

[ACIT Vs. M/S. RANGOLI INDUSTRIES PVT. LTD. – ITA No.1936/Ahd/2010]