Purchase return to to SSI

[Pradeep Jain]

Dear Sir,

We are registered under Central Excise and getting same inputs from companies registered under central excise and SSI unit also , who are availing SSI Excise Exemption and no ED is charged by SSI . Further we do not maintain separate account for duty paid goods and goods supplied by SSI without charging ED.

At the time of purchase return of inputs we are doing reversal of ED on the goods supplied by unit registered under Excise. and not charging ED on the purchase return to SSI units because no duty was charged by SSI unit at the supply of goods to our Company.

I seek your view about the above mentioned system.

Regards

Pradeep Jain

AI Summary

Cenvat credit reversal on purchase returns may trigger interest liability under amended rules, while practice remains disputed.
Issue: whether reversal of Cenvat credit and payment of interest is required when inputs are returned to SSI suppliers who did not charge excise duty. One position treats credit taken as attracting interest until reversal under the amended Cenvat Credit Rules; an alternate position treats returns of defective inputs as proper reversals without constituting wrongful availment or attracting interest. Parties are advised to inform the jurisdictional range officer of the practice to evidence bona fides and mitigate dispute.