The 21-year-old featured in just eight games during his stay in Glasgow, leading to his time in Scotland being brought to a premature end.
Celtic boss Brendan Rodgers confirmed as much on Thursday, saying that he wasn't able to guarantee Musonda the number of games he needs to develop as a player.
"He was a joy to work with, wanted to learn, but he's at the age where he needs to be playing week-in, week-out and unfortunately I couldn't promise him that," said Rodgers.
"I met with Chelsea on Monday. Charly's contract was set in that there was a review at the end of the season, whether they wanted to take him back. The idea for Charly to come out [on loan] was to play as many games as he possibly could.
"Between us both we were thinking he may not get the games that they would like him to get for next season. My job when I bring in young players is to give them the environment, and hopefully give them as much game time as I possibly can.
"If that doesn't happen then of course we don't own the player.
"He's a terrific young player. I think the level the team has been playing at has been difficult at times for Charly to get in. But there's no doubt he's a talent and I'm sure next year he'll go on and hopefully get the games that he wants."