Input credit more than liability

This query is : Resolved

varun gupta (Querist)
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22 May 2009 A manufacturing unit has the liability to deposit Excise & it takes Cenvat credit upon its purchases. Now the situtation is like this that on Purchase of Raw material it is paying excise @8% while on finished goods it is collecting excise @4%(as per excise rates). This way, his Cenvat credit goes on increasing every month & a huge amt as Cenvat credit is appearing as an Asset in his books which although can't be recd from Deptt. What should the co. do so that correct picture be shown in its Final A/cs?

Madhukar N Hiregange

Madhukar N Hiregange (Expert)
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24 May 2009 Show the same in your returns and in the finacnial records indicate by way of note contingent income accounted on cash basis ( confirm with your statutary auditor)

Start manufacturing ( at least the part process ) goods which are liable to excise duty where material costs are low. Alterantively start exporting.