Sales return in case of excise
This query is : Resolved
14 March 2011
Dear all,
our unit is availing the facility of Notification No. 29 & 30/2004 therefore exempted unit. Now we sold item to a party with excise billing. Party returned that goods. Now the ques is-
i) Can we demand the excise duty paid?
ii) Can we sold the same goods without any manufacturing to the same party at higher rate? What will be the excise procedure in this case?
Pls reply asap.
Thanks
our unit is availing the facility of Notification No. 29 & 30/2004 therefore exempted unit. Now we sold item to a party with excise billing. Party returned that goods. Now the ques is-
i) Can we demand the excise duty paid?
ii) Can we sold the same goods without any manufacturing to the same party at higher rate? What will be the excise procedure in this case?
Pls reply asap.
Thanks
14 March 2011
the movement duty paid goods are return to the factory premises for re-made, re-fined or re-conditioned or for any other reason then you can take credit of the duty paid.
how can you justify the change in the transaction value if you are re-sending the goods to the same party without any value addition.
how can you justify the change in the transaction value if you are re-sending the goods to the same party without any value addition.
14 March 2011
Sir since goods returned are in december month. Matter was over at that time.
Now party wants to get same quality material afresh, and we are having the same material returned, at us, surely now it will be sold at current rate which is higher than whatever at that time.
Pls guide.
Now party wants to get same quality material afresh, and we are having the same material returned, at us, surely now it will be sold at current rate which is higher than whatever at that time.
Pls guide.
23 July 2025
Got it, here’s a clear explanation for your excise-related sales return and resale questions:
---
### Scenario Recap:
* You are an exempted unit under Notifications 29/2004 and 30/2004 (likely EOU or SEZ unit).
* You sold goods to a party **with excise duty billing**.
* The party returned the goods.
* Now you want to:
1. Know if you can demand/exercise credit for the excise duty paid on returned goods.
2. Resell the same goods (without manufacturing) to the same party at a higher rate and understand the excise procedure.
---
### 1. **Can you demand excise duty refund/credit on returned goods?**
* **Yes, if the goods are returned to your factory premises** as duty-paid goods, you are allowed to **take credit of the excise duty paid** on such returned goods.
* This is in line with the excise laws that allow adjustment or credit for duty paid on returned goods (often called “duty paid goods returned”).
* **Key points:**
* Goods must physically return to your factory.
* Return must be recorded properly with relevant documentation (e.g., credit note, excise return, stock entries).
* Credit is taken in the same or subsequent excise return periods.
---
### 2. **Can you sell the same goods again without any manufacturing at a higher rate?**
* If the goods are **not physically altered** (no manufacturing/process value addition), and you want to sell the **same goods again at a higher rate**, then:
* The transaction value must be **justifiable and at arm’s length**. You cannot arbitrarily raise the price without valid reasons.
* The excise duty will be applicable on the **resale price** (current higher price).
* Proper **invoice with excise duty** should be raised on the resale.
---
### 3. **Excise procedure in such resale:**
* On resale of the **same goods without manufacture**, you need to:
* Treat the resale as a **fresh sale transaction**.
* Charge excise duty on the **resale value**.
* Maintain proper records showing the original sale, return, and resale.
* Issue excise invoice accordingly.
---
### 4. **Additional notes:**
* If goods were returned in December and credit was taken or adjustments made then, that transaction is closed for that period.
* Resale at a higher price now is a **new transaction**, and excise duty should be charged on the new price.
* Ensure to maintain clear audit trail with supporting documents.
---
### Summary Table:
| Point | Position |
| ---------------------------- | -------------------------------------------------- |
| Duty on returned goods | Credit allowed if goods returned to factory |
| Resale without manufacturing | Treated as fresh sale, charge duty on resale price |
| Pricing | Must be justifiable and at arm’s length |
| Documentation | Maintain clear records of return and resale |
---
If you want, I can help draft a sample invoice format and journal entries for return and resale under excise rules. Would that help?
---
### Scenario Recap:
* You are an exempted unit under Notifications 29/2004 and 30/2004 (likely EOU or SEZ unit).
* You sold goods to a party **with excise duty billing**.
* The party returned the goods.
* Now you want to:
1. Know if you can demand/exercise credit for the excise duty paid on returned goods.
2. Resell the same goods (without manufacturing) to the same party at a higher rate and understand the excise procedure.
---
### 1. **Can you demand excise duty refund/credit on returned goods?**
* **Yes, if the goods are returned to your factory premises** as duty-paid goods, you are allowed to **take credit of the excise duty paid** on such returned goods.
* This is in line with the excise laws that allow adjustment or credit for duty paid on returned goods (often called “duty paid goods returned”).
* **Key points:**
* Goods must physically return to your factory.
* Return must be recorded properly with relevant documentation (e.g., credit note, excise return, stock entries).
* Credit is taken in the same or subsequent excise return periods.
---
### 2. **Can you sell the same goods again without any manufacturing at a higher rate?**
* If the goods are **not physically altered** (no manufacturing/process value addition), and you want to sell the **same goods again at a higher rate**, then:
* The transaction value must be **justifiable and at arm’s length**. You cannot arbitrarily raise the price without valid reasons.
* The excise duty will be applicable on the **resale price** (current higher price).
* Proper **invoice with excise duty** should be raised on the resale.
---
### 3. **Excise procedure in such resale:**
* On resale of the **same goods without manufacture**, you need to:
* Treat the resale as a **fresh sale transaction**.
* Charge excise duty on the **resale value**.
* Maintain proper records showing the original sale, return, and resale.
* Issue excise invoice accordingly.
---
### 4. **Additional notes:**
* If goods were returned in December and credit was taken or adjustments made then, that transaction is closed for that period.
* Resale at a higher price now is a **new transaction**, and excise duty should be charged on the new price.
* Ensure to maintain clear audit trail with supporting documents.
---
### Summary Table:
| Point | Position |
| ---------------------------- | -------------------------------------------------- |
| Duty on returned goods | Credit allowed if goods returned to factory |
| Resale without manufacturing | Treated as fresh sale, charge duty on resale price |
| Pricing | Must be justifiable and at arm’s length |
| Documentation | Maintain clear records of return and resale |
---
If you want, I can help draft a sample invoice format and journal entries for return and resale under excise rules. Would that help?
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