Query on Excise

Kapil Arora (STUDENT) (376 Points)
Replied 19 January 2011

First there is no provision in DVAT for theft or pilferage but surely excise authorities will ask to pay duty on differential amount and second thing why did he claimed CENVAT Credit on total qty if that much is not removed and filed incorrect return in CCR 2004.

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 20 January 2011

Originally posted by : vivek banka

Pls provide your valuable opinion on the below mentioned query

A Ltd enters into a agreement with B ( a job worker) for processing of some materials. The Yield rate is agreed to be 90%.

- what is the reason of 10% less receipt? as the scrap generated would also get returned to parent factory , where the input credit is availed, have u got any production norms set up and sanctioned by department for loss of 10% ? if not then this 10% is also subject to duty.

A ltd during the year sends to B 100 tons of material during the year. The Job worker could only return 80 tons of finished goods. 10 tons (90-80) could not be returned.

- Please re-check at job workers premises, stock might left there, ask them to make arrangements and return the same. otherwise u have to pay duty on 20 tons, ( not 10 tons)

This is a shortage during stock verification. Diff bet book stock & ground stock. As per book it is 90 tons whereas ground stock is 80 tons.We can not conclude whether 10 tons has been sold by job worker or lost / theft/ pilferage etc. A ltd sells the goods supplied by B at Rs 8000 (say) + ED+Sales tax. The job worker agreed to pay the basic price i.e Rs 8000 to A ltd for 10 tons which couldnot be supplied.

- another glitch is going to get formed in eyes of tax authorities with this transaction, they will consider that its practice of unit to sell the goods unaccounted and make adjustment invoices when caught with department, ............. try to rectiry the error, without such gimmics.

Pl. note that cenvat credit has been availed on 100 tons input. Final product is to be removed after paying excise duty.

Now the Query is

Can Excise Authorities/sales tax Authorities ask A Ltd. to pay excise duty/sales tax on the 10 tons?

- you have to pay Excise duty and vat/ sales tax on 20 tons ( not 10 tons) and if its on enforced conditions then they might consider higher sales in terms of valuation under sec 4.

- if 10% is waste and scrap generated in course of manufacture, then it should be properly accounted and sold in market after paying appropriate duty and vat / sales tax, OR when it has no market value then destructed in physical supervision of Range officer of Central Excise.

Nitin Sonawane (Accounts executive) (27 Points)
Replied 25 January 2011

Dear Sir,
I am working as an accountant. Working in a Co. which import from Japan and sells across India as a Dealer, Manufacturer. We have license for Manufacturer as well as Dealer also.
My Question is the following Ledger A/C will go under which Account Heads
(I)Purchase Transactions - Common for all types of invoices:
1.Excise/CVD Duty(Educ + H.S. Cess) paid to Customs
2.Cusotms Duty (incl of all cess)
3.SACD (Special Additional Customs Duty @ 4%)
4.Goods Price (cost of material imported- Purchase price X Qnty.)
5.Freight + Insurance (on FOB basis)
6.Customs Clearing Charges

(II) Sale Transactions : Dealer/CVD Invoice
(A).Sales Price includes following
1. Sale (Qnty x Sale Price)
2.+ CVD (as above) passed on to customers
3.+ SACD (as above) passed on to customers
4.+ Sales Tax (CST/MVAT as the case may be)

(III) Sale Transactions : Excise Invoice
1. Sale value (Qnty x Sale Price)
2.+ Excise Duty payable (on Sale price i.e. 1.)
3.+ Sales Tax (CST/MVAT as the case may be)
(IV) Sale Transactions : Commercial Invoice
1. Sale value (Qnty x Sale Price)
2. +Sales Tax payable CST/MVAT as the case may be)

Please tell that afore said ledger a/c will go under which account heads e.g. CST under C.L.-B/S.
Also suggest if there need to open few more accounts to settle the above accounts e.g. Whatever we paid towards CVD & SACD we pass on to our cutomer via Dealer invoices, & to the extent not passed on where this amt will reflect.

I hope you realise my doubt.

Adjustment of these accounts has troubled me ?
Please help me sir in this context.

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 25 January 2011

Originally posted by : Nitin Sonawane

Dear Sir,
I am working as an accountant. Working in a Co. which import from Japan and sells across India as a Dealer, Manufacturer. We have license for Manufacturer as well as Dealer also.

- as per your statement you have excise registration for manufacturing and dealership both, so u must follow the rules and aware that trading goods and manufacturing input cant be stored and accounted in same manner and place.

My Question is the following Ledger A/C will go under which Account Heads

(I)Purchase Transactions - Common for all types of invoices:
1.Excise/CVD Duty(Educ + H.S. Cess) paid to Customs
2.Cusotms Duty (incl of all cess)
3.SACD (Special Additional Customs Duty @ 4%)
4.Goods Price (cost of material imported- Purchase price X Qnty.)
5.Freight + Insurance (on FOB basis)
6.Customs Clearing Charges

(II) Sale Transactions : Dealer/CVD Invoice
(A).Sales Price includes following
1. Sale (Qnty x Sale Price)
2.+ CVD (as above) passed on to customers
3.+ SACD (as above) passed on to customers
4.+ Sales Tax (CST/MVAT as the case may be)

- CVD /SACD is mere pass on of credit to manufacturer buyer, u have nothing to do in it, by issue of dealers invoice u have to pass on the duty to next stage, your sales price is inclusive of all charges upto your receipt stage.+ your margin too.

(III) Sale Transactions : Excise Invoice
1. Sale value (Qnty x Sale Price)
2.+ Excise Duty payable (on Sale price i.e. 1.)
3.+ Sales Tax (CST/MVAT as the case may be)

- Here you are eligible to take credit of CVD / SACD from the zero level of clearence (cenvat credit) and utilize the same towards the discharge of duty on clearence.

(IV) Sale Transactions : Commercial Invoice
1. Sale value (Qnty x Sale Price)
2. +Sales Tax payable CST/MVAT as the case may be)

- its ok

Please tell that afore said ledger a/c will go under which account heads e.g. CST under C.L.-B/S.
Also suggest if there need to open few more accounts to settle the above accounts e.g. Whatever we paid towards CVD & SACD we pass on to our cutomer via Dealer invoices, & to the extent not passed on where this amt will reflect.

I hope you realise my doubt.

Adjustment of these accounts has troubled me ?
Please help me sir in this context.

1) you can not take single import bill under dealer and manufacture both , u have to maintain import bill wise lots for trading / manufacture ,

a) for trading goods u have to make entries in RG23D and issue dealer invoice in case the buyer has excise registration, otherwise u have to sell the goods without dealers invoice, on the strength of commercial invoice only. Dear has no choice to set off or adjust the duty part, but they have to issue invoice for pass on of duty only. Your commercial invoice would be same for both i.e buyers with excise invoice / wihout excise invoice. your sale price would be inclusive of all taxes of duties except MVAT/CST

b) for goods taken in manufacture, you have to take input credit of cvd/sacd in RG23A-Part2 and with inputs quantity entry in RG23A-Part1, during the course of manufacture u have to maintain RG23A-part-1 for release of quantity for process and on completion you have to enter the quantity finished in DSA ( RG-1) alsongwith scrap entry if any, on sale from manufacturing yard u have to discharge duty u/s 4 at factory gate, and issue invoice by making entries in DSA. your commercial invoice would contain (assesssable value +cenvat+E Cess+S&HSC) + MVAT/CST

2) Reg CST,/ MVAT its independent entry, and paid in cash generally discussing the same in next post.

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 25 January 2011

for dealers accounting

Purchase Transactions - Common for all types of invoices:

1.Excise/CVD Duty(Educ + H.S. Cess) paid to Customs ............................10

2.Cusotms Duty (incl of all cess) ...............................................................40

3.SACD (Special Additional Customs Duty @ 4%)........................................4

4.Goods Price (cost of material imported- Purchase price X Qnty.)............100

5.Freight + Insurance (on FOB basis).......................................................4

6.Customs Clearing Charges .....................................................................2

total .............................................................................................................................................. 160

Entires

Purchase (import) dr ....................................160

to suppliers a/c cr ......................................................100

CVD..................................................................................10

Customs ........................................................................40

SACD ................................................................................4

freight / insurence ..........................................................4

C&F charges ..................................................................2

...............................................................................................

...................................................................160............160

Sales Entry

Buyer A/c Dr ..............................................................210

to CST / MVAT .............................................................................10

to Sales a/c ..............................................................................200

...........................................................................................................

....................................................................................210.........210

Excise invoice is only pass on of duty for only buyers who hold excise registration. .

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 25 January 2011

for Manufacturing accounting

Purchase Transactions - Common for all types of invoices:

1.Excise/CVD Duty(Educ + H.S. Cess) paid to Customs ............................10

2.Cusotms Duty (incl of all cess) ...............................................................40

3.SACD (Special Additional Customs Duty @ 4%)........................................4

4.Goods Price (cost of material imported- Purchase price X Qnty.)............100

5.Freight + Insurance (on FOB basis).......................................................4

6.Customs Clearing Charges .....................................................................2

total ............................................................................................................... 160

Purchase a/c dr .................................................. 146

cenvat credit a/c dr ...............................................14

to suppliers a/c cr .........................................................100

cvd .................................................................................10

customs ..........................................................................40

sacd .................................................................................4

insrence / freight .............................................................4

C&F charges ....................................................................2

______________________________________________

.......................................................................160,,,,,,160

Sales entry

Buyers a/c Dr ..................................................213.40

to mfg sales ...............................................................180

Cenvat ( Excise )...........................................................18

E Cess ( E cess + S&HEC)................................................5.40

MVAT/ CST .....................on mfg sales+Ex+Cess)..........10

________________________________________________

........................................................................213.40..213.40

Manan Modi (Manager) (28 Points)
Replied 19 September 2018

How can the principal insure himself against theft from job worker in such cases?

Is insurance of goods against theft possible for goods at jobworker premises?

Query on Excise

7 Replies

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