Excise duty treatment on purchase return

This query is : Resolved

CA. AMIT (Querist)
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16 December 2013 Dear Sir,

We have purchased some material from a exciseable unit. the material which is sold by them is the trading material for them ie that company donot manufacture that goods. Now we want to return the same material as it is defective goods.

Please inform us whether we can return the material as it is to the seller as purchase return being defective goods.

Secondly what is the treatment of excise duty and sales tax on purchase return.

AJITHKUMAR M

AJITHKUMAR M (Expert)
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16 December 2013 Dear friend,

The goods can be rejected either on the same invoice, if credit not availed; or on your invoice, if credit already availed.

In the former case, you do not have to bother about the excise duty as you have not availed any credit. If credit is availed, then an amount equal to the credit availed is to be reversed while rejecting the goods.

Sorry, I will not be able to help you in sales tax matter.

CA. AMIT

CA. AMIT (Querist)
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16 December 2013 Dear Ajit ji,

Thanks a lot for reply. But I also want to know whether we can show the rejected material as purchase return or we have show it as sales in our books or account.

AJITHKUMAR M

AJITHKUMAR M (Expert)
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16 December 2013 Dear Amit,

In my view, you have to show as purchase return, as no effective sale has happened. However, I am not an accounts related person and as such you are advised to refer to relevant accounting standards or get expert advise from some one specilized in accounts.

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