Purchase goods return

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

08 August 2013 INCASE WE ARE EXCISE MANUFACTURER AND PURCHASED A CHEMICALS 100KG, OUTOF WHICH WE REJECT THE 20KG CHEMICALS AND SENT BACK TO SUPPLIER (IT IS ALSO EXCISE MANUFACTURER)NOW I KNOW THAT WE HAVE TO FOLLOW EXCISE RULES 11 FOR INVOICE FOR PURCHASE GOODS RETURN

BUT MY QUESTION IS AS FOLLOWS
INSTEAD OF RAISING INVOIE CAN WE ISSUE DEBIT NOTE TO THE SUPPLIER FOR PURCHASE RETURN AND IN DEBIT NOTE CAN WE MENTIONED OUR SERIALLY NUMBERED DEBIT NOTE NO. INSTEAD OF OUR SALES INVOICE NO FOR PURCHASE RETURN ?

PLEASE EXPLAIN ME PURCHASE RETURN PROCEDURE UNDER EXCISE RULES AND WHICH OTHER DONCUMENT SHOULD WE MAINTAIN FOR IT

CA Prashant Gupta

CA Prashant Gupta (Expert)
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08 August 2013 No you can't issue debit note
because if you use debit note then that party can't take excise credit. and you can't that credit also because you returned the material. so excise of that amount will be lost.

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Arun Kumar Singh

Arun Kumar Singh (Expert)
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08 August 2013 The material supplied by supplier is rejected. This has to be sent back to the supplier for rework and return. CBE&C, vide its Circular No. 120/30/95-CX-dated 1.5.95, has clarified that such material can be returned under procedure prescribed under rule 4(5)a of cenvat credit rules.

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CA Prashant Gupta

CA Prashant Gupta (Expert)
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09 August 2013 Dear Mr. Singh
in Q it is not mentioned that the material is returned for rework. it is said that it is rejected so this rule can't be applied

Querist : Anonymous

Querist : Anonymous (Querist)

18 August 2013 THANKS FOR YOUR REPLY BUT STILL I HAVE CONFUSION WHAT TO DO SHOULD I ISSUE DEBIT NOTE OR SALES INVOICE TO SUPPLIER FOR PURCHASE RETURN (IN CASE WE R USING ACCOUNTING SOFTWARE TALLY ERP 9 REL 4.51 IN THAT THEY HAVE GIVEN PROCEDURE FOR RELEASING DEBIT NOTE INSTEAD OF SALES INVOICE FOR PURCHASE RETURN)

PLEASE SOLVE MY CONFUSION

Querist : Anonymous

Querist : Anonymous (Querist)

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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10 August 2024 Under the Central Excise Rules, specifically Rule 11, the process for handling the return of goods between manufacturers involves specific procedures. Here’s how you should handle the situation of returning excisable goods, such as chemicals, to the supplier:

### **Excise Rules for Purchase Return**

1. **Rule 11 Procedure:**
- **Invoice Requirement:** According to Rule 11 of the Central Excise Rules, when you return goods to the supplier, you are required to issue a proper credit note or debit note as per the prescribed format. This document is necessary to comply with excise regulations and to adjust the excise duty that was originally paid.

2. **Issuing a Debit Note:**
- **Debit Note Usage:** You can issue a debit note to the supplier for the goods returned. The debit note should include details such as the quantity and description of the goods returned, the reason for the return, and reference to the original invoice. The debit note serves as a record for both parties and supports adjustments in the excise duty.

3. **Sales Invoice Reference:**
- **Mentioning Sales Invoice Number:** In the debit note, it is customary to mention the original sales invoice number of the goods being returned. This helps in linking the return with the original transaction.

4. **Document Requirements:**
- **Debit Note Details:** Ensure that the debit note includes all necessary details, such as:
- Debit note number and date.
- Supplier’s name and address.
- Your company’s name and address.
- Description and quantity of the goods being returned.
- Original invoice number and date.
- Reason for return.
- **Excise Invoice:** You might also need to issue an excise invoice to accompany the goods being returned. This invoice should be serially numbered and should reference the original invoice.

5. **Accounting Treatment:**
- **Accounting Software:** If using accounting software like Tally ERP 9, you should follow the software’s procedures for recording purchase returns and generating debit notes. Ensure that the debit note is accurately reflected in your books and is linked to the appropriate purchase entry.

6. **Documentation to Maintain:**
- **Maintain Records:** Keep copies of all related documents, including:
- The original invoice from the supplier.
- The debit note issued.
- Any corresponding excise invoices or credit notes.
- Delivery challans or transportation documents (if applicable).

7. **Tax Credit Adjustments:**
- **Adjustments in Excise Duty:** The return of goods should be recorded in such a way that it reflects the adjustment of excise duty previously paid. This ensures that you only pay excise duty on the actual quantity of goods that you retain.

### **Summary**

- **Debit Note:** Yes, you can issue a debit note for the purchase return. Ensure it includes all necessary details and references the original invoice.
- **Sales Invoice:** While issuing a debit note is generally acceptable, you should also issue an excise invoice if required under excise rules to ensure compliance.
- **Documentation:** Maintain all relevant documents to support the purchase return and adjustments in excise duty.

By following these procedures, you can ensure compliance with excise regulations while managing the return of goods effectively. If there are any specific local rules or updates, consulting with a tax professional or excise consultant may also be beneficial.