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Cenvat on Sales Return ?????????

CA. BIJENDER KR. BANSAL (ACA, B.COM) (8148 Points)

19 September 2007

Dear All,

We sold material to customer & material returned back to us as sales return due to any reason. '

Now my question is that

1. Whether we claim cenvat on sales return ?

2. Whether entry of cenvat claim to be shown in RG23A Part II as nornal purchase?

Please tell me , what is excact procedure of sales return ? & Please specify notifications & circular regarding it

Thanks & Regards

CA. BKBANSAL

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9 Replies

Ravikumar.G (Consultant) (18525 Points)
Replied 19 September 2007

We can definitely claim Sales Retrun ? Respective Form should be filed with the authorities.

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CA. Dashrath Maheshwari (TaXpert) (15103 Points)
Replied 20 September 2007

Mr.BIJENDER KR. BANSAL, Please Read this carefully, you will find the answer : " PART IV Return of duty paid goods to the factory 1. Return of duty paid goods 1.1 Rule 16 of the said Rules provides for return of any goods, on which duty has been paid at the time of removal, to the factory for being re-made, refined, re-conditioned or for any other reason. In such cases, the assessee shall state the particulars of such return in his records and shall be entitled to have CENVAT credit of the duty paid as if such goods are received as inputs under the CENVAT Credit Rules, 2001 and utilise this credit according to the said rules. As per this rule the goods should return to the same factory in which they were produced. 1.2 If the goods so returned are subjected to certain process which do not amount to manufacture, the manufacturer shall pay an amount equal to the CENVAT credit taken. 1.3 In any other case [where the returned goods are subjected to process(es) amounting to manufacture] the manufacturer shall pay duty at the rate applicable on the date of removal and on the value determined under Section 4 or Section 4A of the Act, as the case may be. 1.4 In the event the assessee has any difficulty, the Commissioner is empowered to resolve the same and permit the entry of the goods into the factory and the availment of CENVAT credit thereon. For this the Commissioner, either on case to case basis by special order or to be applied to "particular type of case" by general order, impose such conditions as may be necessary for safeguarding interest of revenue."

CA. Dashrath Maheshwari (TaXpert) (15103 Points)
Replied 20 September 2007

Next time please post your queries on query page rather then Forum Messages

Sambu Suresh (CA Job) (564 Points)
Replied 20 September 2007

Mr. Darshat, I have one doubt . is the above rule holds good in case the customer return the material because, they found some damage in it. in such case can the manufacturer avail the credit. and the customer is required to send the material with exise invoice.

CA. BIJENDER KR. BANSAL (ACA, B.COM) (8148 Points)
Replied 20 September 2007

Dear Dashrath, Thank for reply. Please clear my one doubt , whether such customer return taken as input for availing credit should be shown in RG 23A Part II also, In our company is oracle implementaion is in process. As per them , Sale return is to be returned on same bonded location from which it is sold and received back & shown in RG1 register . Whether it is correct. As per my view , it is not shown in RG1 register . Please reply

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CA. Dashrath Maheshwari (TaXpert) (15103 Points)
Replied 20 September 2007

yEAH mR sAMBHU sURESH, Its clear in above rule itself

CA. Dashrath Maheshwari (TaXpert) (15103 Points)
Replied 20 September 2007

Mr.BIJENDER KR. BANSAL, It is to be shown in RG1 register

Anoop Garg (FCA) (120 Points)
Replied 14 January 2009

D Maheshwari - Good n precise answer,but dear can u pls let me know further suppose manufacturer gave rate deduction credit note then will the differential excise duty paid earlier be restored as cenvat.example below

suppose inv raised by A Rs 1000 say date.5 jan

Exc duty charged @ 10% Rs100

Later on Buyer raised Dbt Note for rate Diff on Excise Invoice i.e Basic Rs 200+ Rs 20 Excise duty.Manufacturer A accepted it.Dt 10 Jan

Will the Orig manufacturer A is entiteled for cenvat Credit of Rs 20 in relation Dt 10 Transaction?Pls Answer