Shilpaprasanna (Accountant) (55 Points)
03 December 2013Dear All
we are the manufacture of automatic machine (capital Good), we are replacing the free replacement of spares since it is in warranty period, Our engineer has taken the sparce over the DC no 123 and replace the same the Old spare(replaced parts) has been brought back with the same DC No.123. How do I can account in the books and effects on Central excise return etc., . the same part can be used on the other machine to other part since the spares in good condition
Please update me
Harendra Kumar
(Tax Advisor )
(1326 Points)
Replied 17 December 2013
Clarify your activeties after can pass the reply.
Shilpaprasanna
(Accountant)
(55 Points)
Replied 20 December 2013
DEAR SIR
WE ARE MANUFACTURE OF AUTOMATIC MACHINE WE SELL THE MACHINE OF TO THE PARTY WITH ONE YEAR WARRENTY, IF THERE IS ANY PROBLEM IN THE PART WE WILL REPLACE THE PARTS FREE OF COST SINCE IT IS IN THE WARRENTY PERIOD, WHO DO WE PREPARE THE DOCUMENT AS PER CENTERAL EXCISE RULES AND HOW DO WE ACCOUNT IN THE BOOKS OF ACCOUNTS
Harendra Kumar
(Tax Advisor )
(1326 Points)
Replied 20 December 2013
Following step taken in this regard;
01. You sale the material/parts under warranty period on excisable invoice.
02. If excisable goods return on excisable invoice then taken the Cenvat Credit of said material/parts.
03. Fresh excisable material/parts issued the fresh excisable invoice regarding damages good.
Further the accounting treatment in this regard.
01.
Xyz a/c Dr.
Taxes a/c Dr.
To Sales A/c Cr.
( When goods sale)
02.
Sales Return a/c Dr.
To Taxes a/c Cr.
To XYZ A/c Cr.
( When goods return for damages )
02.
XYZ a/c Dr.
Taxes a/c Dr.
To Sales A/c Cr.
( When goods again sale)
R P Ananthakumar
(Sr. Officer - Central Excise/Cash)
(514 Points)
Replied 20 December 2013
Dear Sir, Cleared Spars/parts for replacement of your goods is levyable for central excise duty. You can clear the parts with payment of goods. In this case, you are sending the parts in Free of Cost. In this case the sales tax is not required to pay.
If the m/cs is returned to your factory with proper invoice from your customer then you have to take credit and account in Sales return register. In this case also you have to paid duty for replacement of parts while doing repair/rework/recondition.
Rgs-RP.Ananthakumar
karan jit singh
(Consultant)
(1299 Points)
Replied 20 December 2013
As I am assuming that the part (that is damaged can be repairable),
First of I am discussing the legal framework after that will discuss accounting treatment of such transaction,
1.If the damaged goods bought into the factory ,assuming that duty has been paid at the time of removal,for remade, reconditioned or for any other reason(repair) then you are entitled to claim such Cenvat Cr which have been paid by you at the time of removal, as under excise such credit can be availed on the basis of your self invoicing.
2. Assessee is liable to levy "Amount equal to Cenvat Credit taken" at the time of removal of such good.(In invoice on re-removal of such repaired good, you should mention on your invoice "Amount payable in terms of second part of Rule 16(2) of CER,2002" instead of "ED payable")
3. Due to emergence , fresh good is given to the buyer then, on such good ED is to be levied.
Treatments in Records
Treatment in Books of Accounts
Same as mentioned by Narendra Kumar
Thanks
CAclubindia
