CENVAT Credit

This query is : Resolved

CA Ysil Karunai (Querist)
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14 December 2009 Dear Sir,
When goods are removed from a factory for a sale say Rs. 10000 duty paid.
Subsequently say within 3 months the goods are return back to factory from a buyer for some reasons.
Query:
1. whether CENVAT credit taken by a buyer should be reversed?
2. if yes, whether fully and at what time?
3. Suppose, duty collected by a seller was paid to Govt. in case buyer ask for refund for the whole amount including duty paid for returned goods, what is the treatment for in case of seller and buyer?

Kishanlal Paliwal

Kishanlal Paliwal (Expert)
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15 December 2009 1. Yes, CENVAT credit taken by buyer has to be reversed.
2. Whatever amount of CENVAT taken, to be reversed fully.
3. Since, the seller again could take the CENVAT against the goods returned back and the same is compensated agsinst the duty originally paid at the time of initial removal. The amount may be paid back to the buyer, if payment received against the sale proceed.

Regards