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Reversal as per Rule 3(5)

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This query is : Resolved

CA Harshit Rastogi (Querist)

18 July 2011 R/sir
i have imported some yarn on which i have taken the credit of CCR but now this material is rejected and i have removed that material by Charging Excise Duty (Reversal Amount) but we do not manufacturer yarn so we can not levy Excise basically it is a reversal amount which is shown as Excise Duty under Invoice Now whether we are liable to pay this amount as per Section 11D(1-A) and also revese CCr as per Rule 3(5)
Thanks
Harshit Rastogi

S.P.Mahanta

S.P.Mahanta (Expert)

19 July 2011 It is not clear regarding assessee status, whether as manufacturer or as service provider. If it is as service provider, yarn must be as input, for rendering output service. Best alternative, is to reverse cenvat credit availed on rejected yarn + interest liability. Pl: note,interest liability if applicable to be considered from dt: of availment to dt: of reversal.Once cenvat credit reversed, no further liabilty to pay ex:duty on removal of rejected goods. Rejected goods can be returned to supplier with rejection note mentioned on face of invoice & LR raised.Hope this clarifies the query.

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