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FAQ-11 ( Excise for Manufacturers):

How to Avail Partial CENVAT credit on raw materials purchased? 

Example: ABC Company purchased 3,00,000 nos of Water Container – 20 Ltrs @ Rs.15 per container from Lanco Manufacturer.

ABC Company intends to avail CENVAT Credit only on 1,80,000 nos of containers and on remaining quantity credit will be availed alter as and when required.

Solution

In this case first purchase invoice will be recorded without availing credit and later a separate CENVAT availing Debit Note will be recorded to avail partial CENVAT credit.

Follow the given procedure to avail partial credit

Step 1: Ensure required Party Ledger, Purchase Ledger, Input VAT Ledger and Stock Item are created.

Step 2: Create the Excise Duty Ledgers

Create Basic Excise Duty @ 16% ledger

Go to Gateway of Tally > Accounts Info. > Ledgers > Create

  • In Name field enter the Name of the Duty ledger, In Under group select Duties & Taxes
  • In Type of Duty/Tax field select Excise
  • Enter the Excise Accounting Code
  • In Duty Head field select Basic Excise Duty
  • In Percentage of Calculation field enter 16%. The Method of Calculation will be dafaulted based on the Duty head selected

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Step 3: Create CENVAT Ledgers

Go to Gateway of Tally > Accounts Info. > Ledgers > Create

  • In Name field enter the Name of the CENVAT ledger, In Under group select Current Assets
  • In Type of Duty/Tax field select CENVAT
  • Skip Excise Accounting Code field as accounting code of CENVAT ledgers are not used in any of the reports
  • In Duty Head field select Basic Excise Duty
  • In Percentage of Calculation field enter 16%. The Method of Calculation will be defaulted based on the Duty head selected

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Step 3: Create CENVAT Availing voucher class in Debit Note

Go to Gateway of Tally > Accounts Info. > Voucher Types > Alter > Debit Note

  • Tab Down to Name of Class field and Enter the class Name as CENVAT Availing and press enter.
  • In Voucher Type Class screen, set the option Use Class for Excise/ CENVAT Adjustments to Yes and save the voucher type alteration screen.

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Step 4: Record the transaction in Excise - Purchase Voucher

Go to Gateway of Tally > Accounting Vouchers > F9: Purchases (select Excise - Purchase from the List of Types)

  • Enter the Date of transaction and Invoice details.
  • In Party A/c Name field select the supplier - Lanco manufacturer. Nature of Purchase - Manufacturer will be displayed based on the purchase nature defined for the party ledger.
  • In Name of Item field select the Water Container - 20Ltrs and specify the Quantity and Rate of Purchase.
  • Select Basic Excise Duty @ 16% ledger as we are not availing the CENVAT Credit on this purchase fully.
  • Similarly, select Education Cess and Secondary Education Cess Ledger along with Input VAT Ledger.

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Note: When the Excise Duty ledgers selected in the purchase invoice, the duty amount gets apportioned to the stock item cost. When we avail the CENVAT Credit the item cost gets reduced.

Step 5: Record a CENVAT Availing Debit Note

Go to Gateway of Tally > Accounting Vouchers > Ctrl + F9: Debit Note (Account Voucher Mode)

  • In Change Voucher Type screen select Debit Note and Class as CENVAT Availing
  • In Used For field by default CENVAT Availing will be displayed.
  • In Excise Unit field select the Excise Unit for which you are availing the CENVAT Credit e.g. ABC Company
  • In Nature of Purchase field select Manufacturer

Note: Depending on the purchase made, if the purchase is from the manufacturer and if you are availing Credit then select Manufacturer in Nature of Purchase. If the purchase is from First Stage Dealer then select First Stage Dealer in Nature of Purchase. Similarly relevant Nature of Purchase have to be selected in the Debit Note while availing CENVAT Credit.

  • In Debit field select Basic Excise Duty - CENVAT and press Enter to view Excise Duty Allocations screen
  • In Excise Duty Allocation screen
    • In Type of Ref field New Ref will be defaulted
    • In Invoice No. /Bill of Entry No. & Date field mention the purchase bill number against which CENVAT Credit is availed. ex. AS/2585
    • In Party Name field select the name of the supplier ex. Lanco Manufacturer
    • In Name of Item field, select the stock item against which the credit is availed ex. Water Container – 20 Ltrs
    • In Quantity field, enter the quantity of purchase on which the CENVAT Credit is availed. In this case the Actual purchase quantity is 3,00,000 nos and ABC Company wants to avail partial Credit i.e. only on 1,80,000 nos . Mention 1,80,000.
    • In Assessable Value field mention Rs. 27,00,000 (1,80,000 X 15)   
    • Rate and CENVAT Amount will be calculated and displayed automatically.

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accept the Excise Duty Allocation screen

  • In Debit field select Education Cess - CENVAT and in Excise Duty Allocation screen enter the following details
    • In Type of Ref field New Ref will be defaulted
    • In Invoice No. /Bill of Entry No. & Date field mention the purchase bill number against which CENVAT Credit is availed. ex. AS/2585
    • In Party Name field select the name of the supplier ex. Lanco Manufacturer
    • In Name of Item field, select the stock item against which the credit is availed ex. Water Container – 20 Ltrs
    • In Quantity field, enter the quantity of purchase on which the CENVAT Credit is availed. In this case the Actual purchase quantity is 3,00,000 nos and ABC Company wants to avail partial Credit i.e. only on 1,80,000 nos . Mention 1,80,000.
    • In Assessable Value field mention Rs. 4,32,000 (Basic Excise Duty amount on which Education Cess will be calculated)
    • Rate and Cess Amount will be calculated and displayed automatically

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  • In Debit field, similarly select Secondary Education Cess - CENVAT and provide the details as shown

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  • In Credit field, select the Purchase Ledger through which CENVAT Credit was apportioned to the stock Item cost in Purchase Voucher.
  • In Stock item Allocation screen
    • In Name of Item field select the stock item Water Container – 20 Ltrs
    • In the Amount column enter the total amount (of Basic Excise Duty, Education Cess and Secondary Education Cess) Rs. 4,44,960

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  • In Duty Details screen
  • Select Agst Ref in Type of Ref field
  • In Invoice No. field select AS/2585 dated 15-Aug-2009. Tally.ERP 9 displays item wise duty bifurcation. select Basic Excise Duty and enter the Amount as 4,32,000
  • Select Agst Ref and bill AS/2585 for education Cess and Enter the Amount as Rs. 8,640
  • Select Agst Ref and bill AS/2585 for secondary education Cess and Enter the Amount as Rs. 4,320

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The completed Debit Note is displayed as shown

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