Return goods received after on Year Cenvat credit taken or not

[NARESH VIJAY]

Dear Expert,

We have returnback Cenvatable Finished goods from our ware house after one year.

Material Sent to warehouse Feb 15 and Returnback July 16.Please advice we can take cenvat credit or not .

Akhilesh

[KASTURI SETHI]

Sh.Vijay Ji,

In such situation, Cenvat Credit is admissible as time limit of one year is not applicable to goods received back.Rule 16 of CE Rules, 2002 does not prescribe any time limit for return of finished goods. (See Para No.B.31 of Board's Circular No.96/85/2015-CX.I dated 7.12.15)

[MUKUND THAKKAR]

Nicely explaine by Kasturi Sethiji sir,

In addition of the same you were not saleing the goods. only doing the stock transfer. any stock yard/depot/warehouse is the place of removal. so it is assume that you just transfer the goods one place to another place. so you are eligable to take cenvat cerdit on returns goods your own documents as per circular no.F.no.267/44/2009-CX 8 dt. 25/11/09.

[Ganeshan Kalyani]

Sir, as always Sri Kasturi Sir, had replied to the point and satisfactory and favourable reply within the framework of law. His untiring work is a source of inspiration to me.

Sir, the credit is very much eligible in terms of rule 16 of Central Excise Rules, 2002. Thanks.

[Rajagopalan Ranganathan]

As per third proviso to rule 4 (1) of Cenvat Credit Rules, 2004" the manufacturer or the provider of output service shallnot take CENVAT credit after one yearof the date of issue of any of the documents specified in sub- rule (1) of rule 9. Therefore the relevant date is the date of invoice under which the excisable goods are returned to you. It is July 16. Therefore you are eligible to take the credit till 15.7.2017.

[Ganeshan Kalyani]

Sri Rajagopalan Sir, I would like to share one querist has emailed me in the reference with the same subject. He told me that in the past they had availed the excise credit based on the Debit Note issued by the buyer while returning the goods. The department auditors rejected his claim saying that Debit Note is not the document mentioned in rule 9 (1) of CCR. The querist has mentioned the details as required on the face of the DN . Even then the credit wad disallowed. Please share your view on this. Thanks.

[KASTURI SETHI]

Sh.Ganeshan Kalyani Ji,

There is a plethora of judgements on this issue. Credit on debit note has been allowed vide Board's circular no.122/3/2010-ST dated 30.4.10. One case law is also mentioned as under:-

Calcutta in the case of Vodafone Essar Ltd. Vs. CCE-BBSR-I (Para No.7.1). = 2016 (1) TMI 24 - CESTAT KOLKATA-  2016 (043)/STR/124/TRi

If any auditor has disallowed cenvat credit on the debit note, it is gross injustice to the party.

[Ganeshan Kalyani]

Sir, thanks for the advise. Sir, sometime department sends such letter and act pro-revenue. In such cases the assesse should be strong enough to put his contention clear with supporting provison and case laws. What is eligible should be availed by the assesse. Thanks.

[KASTURI SETHI]

Yes, Sir. i agree with you in toto.

[YAGAY andSUN]

There is no such time limit prescribed in the Rule 16 of the CENVAT credit Rules, 2004. However, such transaction should be knocked off through submission of Form F (in case of stock was transferred, interstate) on quarterly basis and its issuance would be on monthly basis.

[Ganeshan Kalyani]

The query has been replied to the satisfaction of the querist. Anyway, Thanks M/s. YAGAY and SUN for touching the query again after a months gap. Enriching. Thanks.

AI Summary

Cenvat credit admissibility for returned finished goods remains available subject to invoice date limits and documentary compliance. Cenvat credit on finished goods returned from a warehouse is generally admissible because the rule governing return of goods does not prescribe a time limit, and returns from a stock transfer/warehouse are treated as returns of excisable goods. However, a separate one year limitation measured from the date of the relevant document (invoice or other recognised document evidencing the return) determines the period for claiming credit, and debit notes and Form F compliance are treated as acceptable documentary and reconciliation mechanisms.