commercial invoice issue for duty paid goods sold

[Anil Jangid]

We sold goods to x party on payment of excise duty.later x party reject the material and issued debit note us now goods lying x party premises, can we sale to y party under issue of commercial invoice we will mention detail remarks on commercial invoice duty payment of x party.can we do it ,expert please advice.

[KASTURI SETHI]

Sh.Anil Jangid Ji,

Answer is in the negative. Under Rule 11 of Central Excise Rules, 2002 there is no prescribed format of invoice. It is a free format but every valid invoice is required to contain prescribed particulars mentioned in Rule 11 (1). Commercial invoice can be issued only as additional document to Central Excise invoice. Commercial invoice, if issued, T will not be a valid document for availment of cenvat credit. In terms of Board’s Circular No. 1003/10/2015-CX, dated 5-5-2015 (Para No.5(i)), commercial invoice can be issued by a registered dealer in some circumstances but that will also be not a valid document for availment of cenvat credit. Under Rule 11 (1) a pro forma invoice has been permitted to a manufacturer of yarns or fabrics or ready made garments but that too for a few days and ultimately Central Excise invoice has to be issued in support of Pro forma invoice. You may mention all the particulars on commercial invoice but there is a difference between Central Excise invoice and commercial invoice inasmuch as both have different purposes. Commercial invoice cannot be used Central Excise invoice and vice versa.

There are a few case laws wherein the appellate authorities have decided cases in favour of the assessee on the basis of commercial invoice but it is a matter of litigation which should be avoided.

 

[YAGAY andSUN]

Dear Anil,

Debit Notes have not been considered documents to avail the CENVAT credit in case of any rejection or returned duty paid goods. Invoices as mentioned in Rule 11 and VAT/CST Laws are crucial as mentioned by 'Sethi Sir.

Regards

YAGAY and SUN

(Management, Business and Indirect Tax Consultants)

[Mahir S]

If you clear the goods by issuing commercial invoice, then party Y shall not be eligible to avail cenvat credit on such goods.

[KASTURI SETHI]

Sh.Mahir S,

Rightly advised, Sir. I agree with you. Otherwise also commercial invoice cannot replace Central Excise invoice.

[Mahir S]

Yes Sir.

Hence, the procedure suggested by the Anil ji, in his query, does not appear to be legal and proper .

[Suryanarayana Sathineni]

Dear Friend,

As indicated by our learned friends, it is clear that the other party cannot avail Cenvat credit on your proposed Commercial invoice since it is not a prescribed document for availing cenvat credit under Rule 9(2) of ,2004.

Alternatively, you may get back the goods from teh 1st customer and follow the procedure prescribed under Rule 16 of CER,2002 or if it is permissible, let the 1st customer send the material to the proposed customer by raising excise his excise invoice on Ship to party and BIll to party basis ( this is assuming that the 1st party already paid the amont )

Regards

Surya

[Anil Jangid]

our is concessional rate of duty 2%, so party can not avail any cenvat credit.so in such case we can sele from x party to y party under issue of commercial invoice. please advice.

[Suryanarayana Sathineni]

If that be the case, the x party can issue a simple delivery chalan by enclosing the original excise invoice against which you have paid the duty and send to party Y and there after you may issue a commercial invoice for collecting the payment from Y including excise duty and VAT since in his case also y cannot avail credit since you are paying concessional duty under a specific Notification.

Regards

Suryanarayana

AI Summary

Commercial invoice cannot substitute statutory excise invoice, so buyer cannot claim cenvat credit when only commercial invoice issued. Commercial invoices are not substitutes for statutory excise invoices and will not support the recipient's claim of cenvat credit. Debit notes likewise do not permit credit on returned or rejected duty-paid goods. Practical compliance requires either reclaiming the goods and following the statutory return procedure or arranging an excise-compliant transfer from the first purchaser (for example by using an excise invoice on a ship-to/bill-to basis with delivery documentation). Issuing only a commercial invoice for resale does not satisfy the documentation requirements for excise and credit purposes.