taking of credit if debit note issued

[RAMNIRANJAN KANDOI]

If  Input is recd. @ Rs.25/ per kg, duty is also paid on Rs.25/ by supplier. After receipt, if some defect is found than consignee issues Debit Note to the supplier thus pay less to supplier to the extent of Debit Note. Whether full credit can be taken by consignee.Pl. quote some case laws.

[neesha upadhyay]

You can avail the credit on the amount after deducting Debit note amount.

[Mahir S]

Yes, i also agree that credit available after issuance of debit note can be availed. However, the quantity reflected in the books of accounts should tally with the balanced quantity after return of defective peices.

However, related records such as copy of debit note, purchas order, invoice, payment particulars, corrrespondence letters with the supplier etc. should be separately maintaned and shown at the time of audit by excise officers, if required.

[phaniraju konidena]

Actually material supplier can claim the 'refund' for the value of difference, you can only take the cenvat credit on proportionate basis, otherwise it will come into the principle of unjust enrichment.  

[phaniraju konidena]

Actually material supplier can claim the 'refund' on the basis of value of difference or he can take credit on the basis of 'Debit Notes' issued by the consignee if all the contents of the 'Debit Notes' are conformed to the Invoice under rule 11 of CER, 2002[CCE, Indore Vs. Grasim Industries Ltd., (2011 (7) TMI 944 - CESTAT, NEW DELHI )], you are only eligible to avail the cenvat credit on proportionate basis, otherwise it will come into the principle of unjust enrichment.  

AI Summary

Cenvat credit must be adjusted after issuance of a debit note to permit proportionate credit and prevent unjust enrichment. When a debit note reduces payment for defective inputs, the consignee may avail cenvat credit only after adjusting for the debit note, i.e. on a proportionate basis to avoid unjust enrichment; the consignee must maintain supporting records (debit note, invoice, purchase order, payment particulars, correspondence) for audit and reconcile accounted quantities, and the supplier may alternatively claim a refund or take credit if debit note conditions conform to rule 11 of CER, 2002 as reflected in the cited authority.