Excise Credit

Rahul G Asai (Service) (37 Points)

11 November 2009  

Dear Sirs,

This query is related to credit taken during Goods Receipt in a manufacturing plant. Scenario goes like-

 

A manufacturing plant has got 30000 Rs/- credit available in RG23A/C part II register. on 11 Nov'09, plant received goods with ED values as 10000 Rs/-. They take the credit in part II register and the total credit available to a plant is now 40000 Rs/-.

 

Now, during quality check the material gets rejected. Hence, the plant send the goods back to the vendor on their (Plant in this case) excise invoice. This generates a liability of 10000 Rs/-. Liability as o today for this month is 70000 Rs/-. Therefore, total liability is now 80000 Rs/- which is payale on 5th of December 2009.

Therefore the company / plant enjoys a extra credit of 10000 Rs/- in part II register. Can you please explain, elaborate, what benefit a plant can enjoy from this 10000 Rs/- credit? (Ultimately, plant will end up paying 40000 Rs/- only after utilization of credit on 5th of next month.)

 

So, with additional credit of 10000 Rs/-, can plant utilize it somewhere? Or, is it just a G/L balance ?

 

Regards,

Rahul G Asai