Sales/Customer return material Scrap

[SNEHAL SHAH]

R/sir,

We are manufacturing of Chemical . We have sold the material to our party but due to technical problem this material was not accepted by party and reject . We have received this material u/r 16 (1)(2) and take cenvat credit on party invoice copy .

Now as per our chemical expert this material not able to resent to party and we want to send fresh material to party ( as a replacement ) and pay the Excise duty .

Our old rejected material will be either scrap or dispose off .

What implication in excise , please suggest us .

Thanks and Regards,

SNEHAL SHAH

AI Summary

Cenvat credit reversal required when returned goods are scrapped; replacement supplies treated as fresh taxable sales.
If returned goods cannot be re sent and are scrapped or disposed of, the manufacturer must reverse the CENVAT credit availed on those goods; replacement supplies are treated as fresh taxable sales and attract excise duty. Case law requires repayment of credit even when scrap value is declared, so compliance with the rule for reversal is necessary on disposal of returned material.