Excise provision for raw material tolerance quantity

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Amey (Querist)
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25 June 2009 Hi

I have query in respect of excise accounting in cases where GRN is prepared with tolerance limit. Please let me know how the excise records will be updated for below transaction.

Supplier has sent material 100 MT as per challan and has invoiced for same quantity. Excise invoice shows duty applicable on the 100 MT only.

On receipt actual weight of the consignment is measured as 100.32 MT. Now the purchase order had tolerance of 0.5% set. So GRN can be prepared for higher quantity till tolerance is not crossed.

However now how the excise records need to be updated as delivery challan and excise invoice shows quantity as 100 MT only.

My questions are:
1. How the GRN is prepared in such cases? Whether it is to be prepared for 100.32 MT or challan quantity 100 MT.
2. If actual quantity 100.32 MT is taken in GRN, does excise considers tolerance and gives cenvat credit on 100MT though higher receipt is shown?

Madhukar N Hiregange

Madhukar N Hiregange (Expert)
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26 June 2009 AS far as credit is concerned since more material is recived and credit is on only 100 no problem. In case of shortage then whether the tolence ( wieghing scale errors) could be considered a credit available on the whole is a question which may raise some objection from dept. However if consistently the shortage/ excess is being accepted and the same is within the tolence limiut the credit should not be tamapered with.