Our one customer had returned (Sales Return) 1000 numbers of relays to us due to quality issue. We had taken the CENVAT credit of the same at the time of receipt the goods with sales return invoice. Our QA department verified the same in that 750 numbers are good and invoiced and about 250 numbers are going to be scrap. Sir, what is the procedure for this type of scrap sale in excise point of view.

The cenvat credit for the returned goods have been taken as per rule 16(1) of Central excise rules 2002. Further it should be removed under rule 16(2)of CER. Normally if subjected to any manufacturing operation the returned goods should be removed at the rate applicable on the date of removal on the value determined under section (4)/(3)of CEA. If the goods can not be removed as specified under rule 16(2), then rule 16(3) is applied and permission from Commr is required. Since it is scaped permission procedure is advised.