SF340 flight crew noted fumes in the cockpit shortly after departure followed shortly thereafter by a R INTAKE caution light. Procedures were followed and the fumes dispersed shortly thereafter; followed by an uneventful return the their departure airport.

Narrative

Weather on the ground in ZZZ was approximately: calm winds; visibility 4 miles; overcast at 1;000 FT. We were cleared to climb to 10;000 FT and on course. We were in icing conditions with an OAT of -3 degrees C and the engine anti-ice system was on. At 10;000 FT; I noted fumes and checked the engine parameters which were all normal. 10 seconds after the fumes began; the Right Intake caution light illuminated. The First Officer looked out his window and said there are flames visible inside the right engine. I immediately turned off the right engine anti-ice and declared the emergency with ATC; requesting lower altitude (to exit icing conditions) and the ILS. I told the Controller we had 16 souls on board and 2;600 LBS of fuel; and requested the trucks be rolled. We turned back toward ZZZ and began the descent. The fumes and fire stopped within seconds of turning off the engine anti-ice. The emergency/non-normal checklist for Right Intake was referenced but directed me to turn the engine anti-ice 'off' and then 'on;' which I did not do since I determined it was causing the fire. The Smoke/Fumes emergency checklist was also referenced. I spoke with our Flight Attendant and told her we had a problem with the right engine and that we were returning for a landing in ZZZ; no evacuation; 5 minutes until touchdown and to prepare the cabin for arrival. The engine parameters were monitored and all normal; and the Right Intake light extinguished while on the approach. We executed the ILS to a normal landing and considering there was no fire present and no fumes; we proceeded to the ramp; shut down; and deplaned. Upon inspection of the right engine; we noticed approximately 6 inches x 2 inches of the splitter lip was burned. Dispatch and Maintenance were contacted. Supplemental information from ACN 821987: We exited IMC at approximately 2;500 FT and 6-7 miles from the airport where I immediately identified the runway and maneuvered for a visual approach; following the course guidance from the ILS. The approach was uneventful and resulted in a normal landing.