Rejection after 3 years

[Asked by Guest]

We are in receipt of Rejection from Customer on Excise Invoice, but the material was sold before 3 years, the customer had not approved the material since than.

please let us know whether the Cenvat credit can be availed , if yes how, also whether MVAT allow the same.

[YAGAY and SUN]

Dear Sohel,

There is no restriction of time limit under Rule 16 of the Central Excise Rules, 2002 to get back the rejected goods from customers/buyers provided these goods should not be used and must be returned in original packing (specially in your case as goods were withhold by the customer for 3 years) but under MVAT Act goods can only be rejected within 6 months from the date of sale. You can avail the CENVAT credit after following the procedure/provisions of Rule 16 of the CER, 2002. But you cannot avail the Input Tax Credit under MVAT Act read with Rules made thereunder.

Regards

YAGAY and SUN

(Management, Business and Indirect Tax Consultants)

[Mahir S]

Yes, cenvat credit can be availed, but department may ask for corroborative evidence regarding receipt of rejected goods. You have not mentioned whether payments were received 3 years back or not.

Do ensure that you have all requisite documents for sale and receipt of the said goods.

AI Summary

Cenvat credit on returned goods can be claimed if goods are unused and procedural requirements are met, MVAT limits apply.
Where goods returned as rejected are unused and in original packing, Cenvat credit may be availed after following the Central Excise Rules' return and credit procedures, with corroborative evidence of sale and receipt. Under MVAT, however, input tax credit for rejected goods is subject to a statutory six month time limit from the date of sale and cannot be claimed once that period has expired.