sales return under rule 16 central excise

[Anil Jangid]

Sales return under rule 16 of central excise,is it necessary to submit intimation to central excise dept for goods return due to quality problem or party not accept the material.

Some commissionerate issue trade notice and make rule submit intimation.

[Rajagopalan Ranganathan]

Sir,

Sub-rule (1) and (2) of rule 16 of Central Excise Rules, 2002 state as follows: -

(1) Where any goods on which duty had been paid at the time of removal thereof are brought to any factory for being re-made, refined, re-conditioned or for any other reason, the assessee shall state the particulars of such receipt in his records and shall be entitled to take CENVAT credit of the duty paid as if such goods are received as inputs under the CENVAT Credit Rules, 2002 and utilise this credit according to the said rules.

(2) If the process to which the goods are subjected before being removed does not amount to manufacture, the manufacturer shall pay an amount equal to the CENVAT credit taken under sub-rule (1) and in any other case the manufacturer shall pay duty on goods received under sub-rule (1) at the rate applicable on the date of removal and on the value determined under sub-section (2) of section 3 or section 4 or section 4A of the Act, as the case may be.

Explanation: The amount paid under this sub-rule shall be allowed as CENVAT credit as if it was a duty paid by a manufacturer who removes the goods.

In view of the above you are required to maintain proper account for receipt and disposal of the returned goods on the grounds of being re-made, refined, re-conditioned or for any other reason. Therefore it is clear that you need not send any intimation regarding receipt of the returned goods. If any trade notice is issued by the Commissioners it is clearly ultra vires of the rules and you need not comply with such notice. However if you are not in a position to comply with sub-rule (1) and (2) then as per sub-rule (3) if there is any difficulty in following the provisions of sub-rule (1) and sub-rule (2), the assessee may receive the goods for being re-made, refined, re-conditioned or for any other reason and may remove the goods subsequently subject to such conditions as may be specified by the Principal Commissioner or Commissioner, as the case may be. I feel the trade notice mentioned by you should have been issued under sub-rule (3).

[KASTURI SETHI]

Sh.Rajagopalan Ranganathan Ji,

Sir. I endorse your views. In some commissionerates old practice of giving intimation is going on . Assessees file intimation with the jurisdictional Range Officer with an intent that nothing is lost if they intimate otherwise it is not requirement of Central Excise law, as explained by you in detail.

[YAGAY andSUN]

In Rule 16 there is no mention of this aspect. Hence, no need to comply.

[DR.MARIAPPAN GOVINDARAJAN]

I endorse the views of Shri Rajagopalan Sir who discussed the case very elaborately.

AI Summary

Sales return compliance under central excise rules: no intimation required for returned goods; maintain records and claim CENVAT. Sub rules (1) and (2) of Rule 16 require manufacturers to record particulars of returned goods and permit claiming CENVAT credit on duty paid as if received inputs, subject to duty payment where processes do not amount to manufacture or on subsequent removal at applicable rates; proper accounts for receipt and disposal must be maintained. Administrative trade notices mandating intimation of each return exceed these requirements and are ultra vires, while sub rule (3) permits the Commissioner to impose conditions where compliance with sub rules (1) and (2) is impracticable.