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.

AI Summary

Manufacturing Firm Seeks Guidance on Excise Duty for Returned Goods; Clarification on Cenvat Credit Reversal Needed A manufacturing company dealing in poly film packaging materials is seeking advice on the correct application of excise duty for returned goods. These goods, returned due to quality issues, are either reprocessed and resold or sold as waste. The company charges excise duty on the transaction value of resold goods and waste. Responses suggest that charging excise duty on the transaction value is appropriate, but one opinion advises paying based on the higher of the cenvat credit taken or the transaction value. Additionally, clarification is sought on reversing excise duty when the sale value of waste is lower than the cenvat credit.