Reg: recording of sales on accrual basis

This query is : Resolved

Guest

Guest (Querist)

27 August 2011 Dear Experts

We want to record sales of goods on accrual basis without the corresponding removal of goods from the factory

As the client desire to take the delivery of goods later date
(All the substantial risk has been passed on to the buyer therefore the criteria set out in AS-9 is fulfilled)

Now my question is what will be the treatment of such sales ,without corresponding removal of manufactured goods from the factory, on Excise duty taxability

Hoping for an earliest reply from the experts

Thanks in Advance

U S Sharma

U S Sharma (Expert)
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27 August 2011 under excise sales can be booked on actual delivery and duty is payable at the time of invoice only.

to record the finish goods in account of buyer, you may create a seperate finish goods account say "finish goods for (ABC co)" and record there the entries related to that client. if the goods have unique identity then u can open a separate page for specific type of goods under DSA(RG-1)

on the date of actual removal the goods will get cleared from that finish goods account only after paying duties,

Guest

Guest (Querist)

27 August 2011 Thanks sir for the prompt reply

Now sir i would like to ask as we already issued the per-forma invoice to the customer and payment against the same has been fully collected in advance in the last financial year

The client is also forcing to issue the invoice falling in the last financial year

In this situation we have to record the sales in that year

But the goods are cleared from the factory in the next financial year. So accordingly liability to pay excise duty should arise in the next financial year

Sir Can we do so...
would it create any problem in future???

Thanks

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U S Sharma

U S Sharma (Expert)
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27 August 2011 1) proforma invoice is not an invoice, its just finalisation of amount of sale and taxes thereon valid for 30 days normally, which gets cancelled on issue of invoice.
payment against proforma invoice is just advance payment which is to be delivered within 30 days.

2) you can ask you client to take delivery of goods, at any godown which is situated outside your factory premises,

3) You can not issue invoice prior to clearance of goods in physical.

4) as at the time of actual clearance, the invoice is already issued, so we feel that there is no prob to client to account the entries.

ask the client in clear words, regarding their prob to show the amount under advance.