Return of duty paid goods to the factory [Rule 16]

Return of duty paid goods to the factory [Rule 16] :

Rule 16 of the Central Excise Rules, 2002 deals with return of duty paid goods. The said rule is wide enough to cover all the purposes including the goods received for being re -made, refined, re-conditioned.

The rule provides that 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, 2002 and utilise this credit according to the said rules. The narrow proposition of this rule implies the applicability of this rule only to the factory where the goods were manufactured or produced.

Once the goods are returned, two propositions would follow:

1. Where the returned goods are put through a process not amounting to manufacture;

2. Where the returned goods are put through a process amounting to manufacture

In the first situation i.e. the process not amounting to manufacture, the amount equal to the CENVAT credit availed on such goods has to be debited on removal. The manufacturer shall thereby pay an amount equal to the CENVAT credit taken. In the second situation i.e. the process conducted on such goods amounts to manufacture, duty at the rate applicable on the date of removal and on the value determined under section 4 or section 4A or 3(2) of the Act, as the case may be, has to be paid on removal of such goods. The amount paid as such shall be allowed as CENVAT credit as if it was a duty paid by the manufacturer who removes the goods.

Sub-rule (3) of Rule 16 says 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 may , 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.

The process can be summed up as under:

Process Amounting To Manufacture

Process Not Amounting To Manufacture

(a) The goods received under rule 16 shall be issued to production under separate series of issue slips.

(b) The processed items shall be accounted in the Production Register/Daily Stock Account and then removed under the cover of an invoice under Rule 11 of Central Excise Rules.

(c) The duty on the removals will be at the rates applicable on the date of removal on the value to be arrived on the basis of section 4,4A or 3(2) as the case may be.

(a) The goods shall be issued to production under special series of issue slips clearly identifiable.

(b) The details of the goods shall be recorded in the repairs register.

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