what is the processor to account for Sales Returns after surrendering the R.C.

[Srivatsan Krishnamachari]

Query:  A company registered under  Companies Act, 1956, has two manufacturing units (Unit A in the state of A.P & Unit B in the state of U.P) having separate Central Excise Registrations. Unit B (U.P) dispatched some materials (required duty duly paid) to a party, but the party rejected those materials and those materials are in the custody of the transporter to whom the said Company has to clear his bills and he refuses to part away with the materials till his dues are cleared. In the meantime the Company has closed its Unit B (U.P) and the Factory Buildings old to a third party. All the stocks including finished materials have been cleared paying duty before the Factory Building was sold.

Now the Company wants to clear the transporter’s dues and take back those rejected materials dispatched from the Unit B (U.P) to its Unit A (A.P) since the Unit B (U.P) no longer exists. Is the Company permitted to get back those rejected materials to its Unit A (A.P) if so what are all the documents required to accompany the Consignment. Can the Company reverse the duty paid earlier on those rejected materials and take credit in its books pertaining to its Unit A (A.P?)

Kindly clarify our query.

AI Summary

Company Cannot Claim Duty Credit at Unit A for Rejected Materials from Closed Unit B A company with two manufacturing units, one in Andhra Pradesh (Unit A) and the other in Uttar Pradesh (Unit B), faced an issue where materials dispatched from Unit B were rejected by a party. These materials are currently held by a transporter due to unpaid dues. The company has since closed Unit B and sold its factory. The company seeks to clear the transporter's dues and transfer the rejected materials to Unit A. They inquire whether they can reverse the duty paid on these materials and take credit at Unit A. The response indicates that credit cannot be availed at Unit A since the materials were dispatched from Unit B.