DUTY PAID ON CANCELLED INVOICE, Central Excise

[RAMAPPA SOMAKKALAVAR]

Dear Sir/Madam,

 

We are manufacturer of small commercial vehicle after completion of manufacturing process we have parked our vehicles in supply float area due during internal movement 10 vehicles got damaged, after that we have billed to Insurance company for claiming the insurance,

 

• Insurance company not interested to take our vehicles as those vehicles not covered by insurance policy. Hence vehicle are lying at our premises and we cannot bill it other customers due to damage.
• We have reversed the transaction next month in our system through cancelling the invoice
• While submitting (ER1) return we have debited excise duty in our register and we have reduced no of vehicle in our RG1 register
• There is no physical movement of vehicles
• After cancelling the invoice we have not communicated to excise department

 

Query.

1)      How to get these vehicles in to our RG1 register for increasing the inventory

2)      Can we avail cenvat credit based on our cancelled invoice

3)      Till today we have not given intimation to excise deprtment and those duty paid vehicles are lying at scrap yard

4)      What would be the excise dept view on this

 

Request you to kindly suggest on this

 

Thanks and Regards

RAMAPPA SOMAKKALAVAR

Posts / Replies

[Pradeep Khatri]

You had to intimate the Central Excise Department within 24 hours but you didnot.  The facts which are being stated here does not represent the true picture that the vehicle got damaged during the movement within factory premises area.

However, now you should present your case before the Commissioner of Central Excise.

[RAMAPPA SOMAKKALAVAR]

Dear Sir,

 Thanks for your mail..

 We have paid the duty on 10 vehicles for which we billed on insurance company as if we will get insurance claim against those 10 vehicles and in return insurance co will take over those 10 accidental vehicles.

 Subsequently we came to know that the insurance co is not going to settle the claim and finally they informed after 1 month and accordingly we cancel those invoice and reverse the transactions in our books.

 Our drought is whether the duty paid by us is refundable(can we take the credit now on the basis of cancelled invoice). And also can we increase our inventory qty as our there were no physical movements as well as the sales transactions were reversed in our books.

 Please clarify what needs to do for avoiding any department notices/SCN.

 With Regards

RAMAPPA SOMAKKALAVAR

[Dilip Darji]

Dear Sir.

Considering the situation, you dot have any alternative but to follow the conditions prescribed under Rule 16 (3) of The Central Excise Rule, 2002 and foolow the procedure as laid down by the Commissioner of Central Excise.

Regards

[R MUTHURAJ]

Dear Mr.RAMAPPA SOMAKKALAVAR,

The same type of problem in a different manner, we have come across and the details are as under:

"We have raised the Supplementary Invoices to a customer at Haryana as under:

INVOICE NO.                   INVOICE DATE                 UNIT

128965-70                           31/03/2012                       IV

The above invoices were raised, based on the price increase given by the customer. The Supplementary Invoices has to be raised for Motors Parts Division and Scooters Parts Division separately. But, the our company Sales Department has raised the said supplementary invoices jointly. The Sales Department has tried to convince the Customer with the original invoices for acceptance. Nevertheless, the customer has strictly refused to accept the same and therefore we have cancelled the supplementary invoices.

As per  Section 11B of the Central Excise Act, 1944  we have applied for the refund of Excise duty and Interest paid on such supplementary invoices.

Excise duty is given credit vide passing Order in Original by the AC.

Interest was being granted by cheque"

By applying the above basis, you can approach the department for refund of ED paid.

Now i answer to all your queries: 

1)      How to get these vehicles in to our RG1 register for increasing the inventory:

Since you have cancelled the transaction in your books, you have to reverse the quantity and thereby the inventory will automatically get increased.

2)      Can we avail cenvat credit based on our cancelled invoice

No, only the department has to grant either refund or credit by way of passing Orders.

3)      Till today we have not given intimation to excise deprtment and those duty paid vehicles are lying at scrap yard

Immediately intimate the department regarding the facts and circumstances, so that you can get relief in this issue, even if during audit any issue arises.

4)      What would be the excise dept view on this - Delay in intimation will not result in any monetary loss, you try to explain any facts for non-communication at the time of incident and now you can intimate. The CE dept has to accept even the delayed information. Generally procedure lapse in some cases can be ratified/accepted by the department.

  All the above are in my opinion to the extent of knowledge and experience i have gained so far.