Excise duty on returned inputs attaches only to the net quantity retained, not the amount initially cleared.

Excise duty on inputs cleared to a sister concern was payable only on the net quantity actually retained after return of part of the goods, because duty had already been discharged on that retained quantity. A demand to levy duty on the quantity initially cleared but subsequently returned was unsustainable, as the returned goods could not be treated as a final removal attracting duty. The document notes that the other issues were not separately examined, and the revenue challenge failed.

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Issues: Whether excise duty on inputs cleared to a sister concern was payable on the entire quantity shown in the invoice or only on the net quantity actually retained after return of part of the goods.

Analysis: The quantity returned by the sister concern was not in dispute. The duty had already been discharged on the net quantity remaining with the sister concern at the end of the month. The demand sought to levy duty on the quantity initially cleared but subsequently returned. In such circumstances, the returned quantity could not be treated as a final removal so as to attract duty. As the duty liability arises only on the quantity actually retained and supplied, the demand on the returned quantity was unsustainable. The other issues were not separately examined.

Conclusion: The demand on the returned quantity was not sustainable and the appeal of Revenue failed.

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