When you have recorded shipment of a outbound package, you can record the delivery or return status of the shipment in Delivery Challan.
To record the delivery or return of a package shipped, in the main page, Go To More > Delivery Challan > New
System will show all the outstanding shipments. Tick 'Delivered' checkbox if the goods is delivered or tick 'Returned' if the package is returned or undelivered.
When you tick 'Returned', if the Sales Return Order is enabled, a return order is auto generated by the system.