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Rule 16 excise

CA Ankith Jain (Chartered Accountant) (973 Points)

07 April 2016

Dear all, Please explain Rule 16 of Central Excise Rules related to Credit of duty on goods brought to the factory with example. Please its urgent.

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6 Replies

CA Suri Kota (Assistant Manager @ EY) (955 Points)
Replied 07 April 2016

Sales return can be best example.

The duty paid at the time of clearance of goods can be taken as credit if there is any sales return out of that slot. And again if you do some modifications, again wen u sell such goods, u hav to pay exices duty. !!!!!

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CA Ankith Jain (Chartered Accountant) (973 Points)
Replied 08 April 2016

Thanks a lot sir!!

Madhukar N Hiregange (Chartered Accountant) (39034 Points)
Replied 08 April 2016

Rule 16 allows credit for goods which are returned. If you resell without process amounting to manufacture then, duty reversal is to be done. If process amounts to manufacture then pay duty based on transaction value.

CA Ankith Jain (Chartered Accountant) (973 Points)
Replied 16 April 2016

Thank u for the reply. Another doubt. If I sell the goods without processing, then I need to pay an amount equal to credit taken. So my question is can I utilise CENVAT credit for such payment?? Because in Rule 3(4) which deals with utilisation of CENVAT credit, has not mentioned about this payment.