Cenvat of duty on sales returned when duty paid on concessional rate without getting cenvat

[S.C. WADHWA]

Dear Experts,

We are paying excise duty on our products falling under chapters 20 and 21 @2% and not availing cenvat benefit. My query is when we get any consignment as sales return, in that case how we resale the goods without payment of duty. Please give your expert opinion.

Regards,

WADHWA

[Rajagopalan Ranganathan]

Sir,

Notification No. 1/2011-CE dated 1.3.2011 as amended stipulates that no credit of such excise duty or additional duty of customs on inputs or service tax on input services has been taken by the manufacturer of such goods (and not the buyer of such goods), under the provisions of the CENVAT Credit Rules, 2004. Therefore when excisable goods cleared under the above Notification is returned for being re-made, refined, re-conditioned or for any other reason under rule 16 of Central Excise Rules, 2002 you can take the credit of duty paid on the returned goods. Under rule 16 the returned goods are treated as inputs. Therefore, when you return the excisable goods after being re-made, refined, re-conditioned etc., you have to pay duty afresh because no credit of such excise duty or additional duty of customs on inputs or service tax on input services has been taken by the manufacturer of such goods.

[Rajagopalan Ranganathan]

Sir,

In continuation of my reply dated 13.1.2015, if you clear the returned excisable goods after being re-made, refined, re-conditioned etc., under Notification No. 2/2011-CE dated 1.3.2011 on payment of duty @6% then you can avail the duty paid on the returned goods as credit provided the the returned goods are specified under the said Notification..

[DR.MARIAPPAN GOVINDARAJAN]

Thank you for Shri Rajagopalan for his detailed reply.

AI Summary

Cenvat credit on returned excisable goods may be available if returns qualify as inputs and meet notification conditions. Returned excisable goods cleared earlier at a concessional duty rate and not having generated CENVAT credit for the manufacturer are treated as inputs on return; the manufacturer may take CENVAT credit of duty paid on such returned goods when the returns qualify under the applicable concessional-notification conditions, but if the goods are resold without qualifying under that notification duty must be paid again on resale.