First stage dealers-excise duty treatment

This query is : Resolved

CA Abhiram Bharat. (Querist)
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30 July 2011 Dear experts,
kindly solve my problem.
there is a private limited company which is a FSD. it purchases directly the material from manufacturers under the cover of excise invoice.
suppose it purchased 10 units @Rs.50/-each
+ excise duty @ Rs. 5/- each
+VAT/CST @ Rs. 5 each/-

now they have sold out 30 units @ RS. 60/- each.+ they have passed on the cenvat on these 30 units.+applicable CSt.
on next 10 units they have not passed on the credit.
remaining 10 units..??how to value this closing stock..
what will be the treatment of excise duty in closing stock?will ie be included in stock or not?//

in this case, the excise duty account remains untallied.. what is to be done..??
if any adjustment entry is to be passed, please explain in detail ASAP..
kind regards-
CA Abhiram Bharat..

Rahul Vora

Rahul Vora (Expert)
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02 August 2011 Dear Abhiram,

First of all, a FSD should not include excise duty in closing stock. Excise Duty for a FSD is not an asset.

If a FSD does not pass on the credit then that duty is to be reversed. It has to be debited to P&L account as it will be a loss as it will not be able to recover the duty.