Rejected Return Goods (Re Sale As Such Or A Waste)

[Guest]

As discussed I request you to pl. give your opinion on  resale of returned goods the detail I clarify as under:-

We are a manufacturer of plain /printed poly film being sold as a packaging  material for use by oil industry and other similar consumer industries. The printed materials generally customer specific where as plain materials for general packaging usable for common customers.

We sometimes receive back our sold material to our customers on quality ground or some other reasons. Such material once received are inspected by our QC and depending on the condition of material we take the following action:-

1)      We re- process the returned goods and remove the defect noticed to make it usable for customers. after removing defects we  re- sale to the same customer (if customer specific printed material) or similar other customer (if is plain material ) .During re processing we generate some waste material that we sale to some other customers at current market price  in a normal course.

2)      The returned material ,once received are taken into stock and we take  cenvat credit for the amount excise duty.

3)      When it is resold after reprocessing we charge excise duty on its transaction value. We generate some waste material  during reprocessing that is also sold to some other customers and excise duty is charged on its sale value.(transaction value)

4)      Some of the returned material even after re processing are not found suitable to the customers are subsequently sold to some other customers at discounted price.

 We request you to give your opinion on the following:-

1)      Whether excise duty charged by us while re sale of returned goods after reprocessing on its transaction value is in order or not.?

Your earliest response on the matter shall be highly appreciated.

[SHIVKUMAR SHARMA]

Dear Mr.Patel

Excise duty charged by  you while re sale of returned goods after reprocessing on its transaction value is in order.

SHIVKUMAR SHARMA

[Ramesh Patel]

Dear Bharat Patel

Mr. Shivkumar Sharma is right.  But in my opinion You have to pay excise duty on the basis of cenvat taken on return goods or Excise duty on transaction value after reprocessing which ever is higher.

[SHIVKUMAR SHARMA]

Dear Mr.Ramesh

During reprocess of rejected return goods the production deptt.is declared few  waste material out of total material.  Your view is applicable only for clearance of waste material generated & not for  Fresh material.

In this regard please refer rule 16 of central excise.

SHIVKUMAR SHARMA

[Guest]

please tale me weather excise duty reverse or not ?

1-first we received rejected goods and same will be rejected and sale as a waste.

received rejected goods with modvet rs.10000/-

and sale waste with duty rs. 4000/-

so differential 6000/- excise duty to be reverse or not ?

please reply immediate 

AI Summary

Excise duty on resale of returned goods: charge duty on transaction value after reprocessing, subject to comparative duty treatment. The issue is whether excise duty on resale of returned, reprocessed polyfilm should be charged on the transaction value. The manufacturer records Cenvat credit on returned goods, reprocesses material and sells reprocessed output and waste. One opinion affirms charging duty on transaction value at resale; another advises applying the higher of duty attributable to Cenvat on returns or duty on transaction value, noting that the comparator approach is principally relevant to waste clearances under applicable valuation rules.