01 June 2012
Dear All Experts, We have supplied goods to our customer on excise invoice.due to some techniccal reason our customer has rejected our material and told us they will return rejected material to us.Now how I record above transaction in my books of a/c as I have cleared the goods after making excise Invoice. is it possible to cancel the excise invoice and issue a new bill or is any provision in excise law to issue a credit note with excise duty to customer. Kindly suggest earliest. With Regards, SAGAR
Issue a credit note to the customer including excise duty.
Inward the material and avail the cenvat credit in terms of Rule 16 - CENVAT Credit on Returned Goods.
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The revenue has always been suspicious of the rejected goods. The reason is that if allowed to enter the factory maybe misused and fresh production removed as repaired goods. To enable such a transaction, and to safeguard the revenue, Rule 173H was introduced in Central Excise Rules 1944. Central Excise Rules 2002 had replaced the old Central Excise Rules 1944, under which old rule 173 H was replaced by Rule 16 deals with the revised procedures to receive the duty paid goods for Re-conditioning, re-work and refining etc.
For the purpose of proper understanding of Rule 16 the same is provided hereunder:
16(1) where on any goods on which duty had been paid at the time of removal there of are brought to any factory for being Remade, Refined, Reconditioned or for any other reason, the assessee shall state the particulars of such receipts in his records and shall be entitled to take the cenvat credit of the duty paid as if such goods are received as inputs under the cenvat credit rules 2002 and utilize this credit according to the said rules.
16(2) if the process to which goods are subjected before being removed does not amount to manufacture, the manufacturer shall pay an amount equal to the credit taken under Sub-rule (1) and in any other cases the manufacturer shall pay duty on goods received under sub-rule (1) at the rate applicable on the date of removal & on the value determined under sub-section (2) of section 3 or section 4 or section 4A of the act as the case may be.
16(3) if there is any difficulty in following the provisions prescribed under sub-rule (1) and sub-rule (2), the assessee may receive the goods for being remade, refined reconditioned or for any other reason and remove the goods subsequently subject to such condition as may be specified by the commissioner.
Following are the conditions to be fulfilled under Rule 16 to receive back the duty paid goods & to avail the cenvat credit.
•The goods received under rule 16 must have suffered the duty at the time of initial removal. In view of relaxation given by the CBEC, the duty paid goods of any unit can also be received. This is a big relief to units having more than one factory located in different states.
•The goods received back for being remade, refined, reconditioned or for any other reason. The words “any other reason” gives the leverage to manufacturer In Asahi India Glass Ltd vs. CCE 2006 (199) ELT 66 (Tribunal Mumbai). Where it was held that, Duty paid glass received back in damaged condition for being “Remade” purpose, credit can be taken as per provisions contained in Rule 16 of Central Excise Rules 2002.
02 June 2012
thank you very much for explaning in easay way.now I will issue to credit note to our customer and would take cenvate credit on rejected material.
CAclubindia
