Cenvat Revarsal on Purchase Return

 Dear Sir,

my problem is only what document is needed for purchase return from our factory so that the vendor can

avail excise credit on the basis of that document.

As i have already mentioned that i have given hi purchase returrn invoice but as per him excise dept. if not 

accepting this document for cenvat credit.

Return Purchase Bill to Party and Rejection letter on letter head. or Issue a sales invoive for the same. but it will entered in purchase return. not sales. so you can safe from Sales tax form.

first not claim the cenvat credit on the material rejected. if u had taken the credit reverse immediately. retrun the purchase bill (transporter's copy) to the supplier along with the rejection letter. on this document  ur supplier can calim the cenvat creidt. 

Otherwise take the cenvat credit on the material supplied by supplier and issue your sale invoice to the supplier but specify on the invoice that this is a rejection of the material by giving cross reference of the suppliers bill no date etc 

The inputs or capital goods can be removed as such (any reason like rejection, quality problems, excess supply etc.) from the factory of manufacturer or premises of service provider on payments of an 'amount' equal to cenvat credit availed when the credit was taken. In other words, it amounts to reversal of cenvat credit taken [rule 3(5)].

The vendor is required to avil the credit based on his own invoice ( triplicate) to the extent of the returns which is evidenced by your delivery challan. You may ask him to refer Rule 16 which allows credit on invoice ( no copy has been specified) it could be your invoice or his.

You may send him a certificate that you have reversed the credit in your records for his use.

1.  Since you had initially availed credit, you can return the material under any of the following two procedures:

(i) You may remove the material under rule 3 (5) of Cenvat Credit Rules. Here you should issue a C. Excise Invoice; put remark "Removal of Inputs as such under rule 3(5) of Cenvat Credit Rules, 2004"; pay an amount equal to the credit taken (and charge it in the invoice).

(ii) You may remove it under job-work procedure of rule 4(5) of Cenvat Credit Rules. This procedure would be useful if the material is to be brought back after rectification.

2. Under rule 16 of C. Excise Rules, 2002, the receiver of duty paid goods is entitled to credit (even if it is not an input for him). If you issue an invoice under rule 3 (5), the receiver can avail credit on the basis of the same. 

we have purchased sponge iron which on quality test was tested of inferior quality. the supplier told us to raise a debit note of 25000. do we need to reverse the cenvat credit availed on the quantity of the value of debit note.we have not returned the goods. please advice.

If you raise purely debit for  meeting the quality/ inferior quality, not required to reverse CENVAT Credit.  You should reverse only when the goods are returned to the vendor.

what do we need to write in particulars of debit note rasied if its for quality issue.

You can mention in the debit note as "quality difference" or "poor quality".

In order to make it more clear, you may mention that: "Material retained by us for use" (so that the department should not allege that the material was also returned).

In case of purchase return, If we issue a sales invocie to party for the purpose of taking cenvat credit, than whehter party can take vat credit or not? i.e Vat credit is also required to passed on

Whether it is required to show our Sales tax return as sales to give credit and match with ITC profile??

Kindly give response