Input on damaged goods

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This query is : Resolved

Arunachala (Querist)

19 December 2014 Hi sir I hav one doubt regarding whether to take input credit on sales return of damaged goods.. We are doing tiles business. While travelling some goods are damaging.. So please help me to solve this issue

CA Kumar Mukesh

CA Kumar Mukesh (Expert)

20 December 2014 As per Rule 16 of the Central Excise Rules, when duty paid goods are returned to the factory, the manufacturer is entitled to take Cenvat credit of the duty paid as if such goods are inputs under the Cenvat Credit Rules. Now what is the document under which these goods are to be returned and credit to be taken? This interesting question reached the Chennai Bench of the Tribunal recently. The goods were returned by the buyer under the cover of a letter and the assessee took credit on the basis of the triplicate copy of the invoice already available with him. The department took strong objection on the ground that the triplicate copy originally retained with the manufacturer is not a valid document for taking credit as this invoice does not show the manufacturer as the consignee. Production of a valid document is a mandatory requirement for taking credit. The Tribunal observed that the intricate requirements under the erstwhile Central Excise Rules are absent in the simplified Cenvat Credit Rules. It further observed that any of the regular copies of a manufacturer’s invoice is a document for Cenvat Credit. Therefore the triplicate copy available with the manufacturer is an appropriate document and could be used for availing of Cenvat Credit. Though this is not a final decision but a stay order, the Tribunal appears to be convinced that any copy of the invoice is a perfectly good document for taking credit.

Rupesh Jain

Rupesh Jain (Expert)

20 December 2014 you take credit no the goods and when you resale it then you have to pass the same duty when you take on rejdction.
if goods is demaged then you have not eligible to take credit, if you take then during the excise audit you have to pay duty with intt and penality.

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