Registration of Manufacturer's Depot/Warehouse

[Srivatsan Krishnamachari]

Dear Gentlemen,

Please enlighten me with your clarifications for my Queries mentioned below

Assessee’s Factory having Central Excise Registration clears the Goods manufactured there in by paying the applicable duty to its Depots in various places; some of them situated in other States. The Depots store those products and in turn sell them to Dealers. The method of Invoice is as follows:

Factory charges (say) Rs.100 per unit, pays duty with Education Cess @10.3% and so the Price the Products cleared to its Depots  Rs.100 + Rs.10.30= Rs.110.30.

The Depots clear the products received as stated above (Say) @ Rs.150 per unit plus applicable Sales Tax to the Dealers. The Depots raise Commercial Invoices only as they have not registered with the Central Excise Range Offices Concerned where they are situated.

The assessee-Factory at the time of remittance of duty remit duty of Rs.10.30 (@10.3% on Rs.100) and also duty @10.3% on Rs.50 (Price at which Products are cleared at the Depots i.e. 150 --- Rs.100) Rs.5.15. Totally duty of Rs.Rs.15.45 is remitted to the Range Office under whose jurisdiction the Assessee – Factory comes under. The Assessee does not take any credit of the duty paid at the first place of removal (Factory-Gate) and at the Depot. The Price charged by the Depots to different Dealers varies from party to party depending on the Quantum purchased and terms of Payment. Never the less, whatever the increase over and above the Factory Price of Rs.100 are promptly dealt with by paying the duty on the differential amount.

Is this Procedure correct?  Since the Assessee does not avail credit of the duty paid while clearing the Goods to Depots and the Depots concerned also does not issue any “cenvatable Invoice “ but only commercial Invoice, can the Depots function without Registration with the Range Office concerned in the places  where they  are situated.

From one of those Depots functioning in a different State, a Dealer doing business over there buy the Goods and after some time rejects a portion of the Goods purchased as above by returning  the same direct to the Assessee’s Factory since the Assessee in the intervening  period closes the Depot concerned. The dealer while returning the” Rejected Goods” raise Invoice at the same Price at which he had purchased  from the Depot.

Now the Goods earlier sold through the Depot are returned to the Factory and so it is “Sales Return”. Can the Assessee take credit of the Duty so paid on the rejected/returned Goods?

Pls. refer  case law, if any for the above.

Thanks & With Regards,

K.Srivatsan

[YAGAY and SUN]

Dear Sir,

Kindly refer Rule 16 of the Central Excise Rules,2002. If the goods are being return at your factory premises, you can avail the CENVAT credit on such goods as inputs for further processing.

Further, start paying duty at factory  gate on the price on which you remove goods from your depots.

Regards

Pradeep Khatri

[palaniappan thirukalathiappan]

Dear Sir,

You need to consider the last sale price from Depot while raising invoice from factory as per valuation rules.

 

Regards

 

AI Summary

Cenvat credit entitlement for returned goods: manufacturers may claim input credit when rejected goods return to factory. Whether unmanned or non registered depots issuing only commercial invoices shift duty and credit obligations to the manufacturer, who remits duty at factory on factory price and on any price differential, and may avail Cenvat credit for goods returned to factory premises treated as inputs; valuation for factory removal should follow the depot's last sale price for determining duty.