Tax & Excise in Third Party Sales

[Former Member]

Hi Friends,

As per Std.SAP in third party Sales Scenario a PR will be automatically created when we save the SO & out of that we create a PO.

Now kindly provide clarifications for the below query's

1. When we create a PO with respect to this PR (Is taxes & excise applicable) ?

2. How we have to maintain this Third Party Material in J1ID inorder to determine the excise rates for Calculation?

3. As per this Scenario our Vendor will deliver the goods to our customer & we will do a Statistical GR which will post to the consumption & GR/IR clearing accounts. Now what will the impact in Excise side as our material in the PO is subjected to excise?

4. Do we take the Cenvat credit as in case of Raw materials??

Since I am not clear in the excise & taxes part of this Scenario. Please help me..

Regards,

[Former Member]

1. When we create a PO with respect to this PR (Is taxes & excise applicable) ?

Yes, Tax is applicable.

2. How we have to maintain this Third Party Material in J1ID inorder to determine the excise rates for Calculation?

It is possible to maintain the material in J1ID and Excise can be maintained as manual condition type. Incase of SD JMAN is Manual Excise Condition Type.

3. As per this Scenario our Vendor will deliver the goods to our customer & we will do a Statistical GR which will post to the consumption & GR/IR clearing accounts. Now what will the impact in Excise side as our material in the PO is subjected to excise?

4. Do we take the Cenvat credit as in case of Raw materials??

We have to consider Excise amount also, which will be later used for Cenvat credit.

Regards,

Rajesh Banka

[Former Member]

Hi Rajesh,

Thanks a lot for the reply.

Kindly provide clarifications for the below points also.

1. As I understand from the reply Excise & tax is applicable in Third Party Sales Scenario. Now how do I maintain my HAWA material in J1ID (esp. the material type).

Since I am using the TAXINJ Procedure when I input a tax code in PO system has to determine the rates based on my J1ID settings.

2. Secondly in third Party Sales the vendor is directly delivering the goods to our customer So whether we can avail the Cenvat credit at the time of GR.

How will be the accounting impact incase of inventory as well as Excise side.

Expecting valuable responses.

Regards,

[Former Member]

HAWA being Trading material, It is not possible to issue Excise benefit to customer, but as we are making a statistical inward, it may not be correct, but the benefit can be taken as concerned for utilization. Even the Pricing Procedure in case of SD, Excise should be added as the main component of Price and not reflected separately.

Regards,

Rajesh Banka

[Former Member]

Hi Rajesh,

Thanks for the reply.

Can you please explain your reply using an example with Excise ??

It would be very helpful.

Regards,

[Former Member]

Excise Duty: Excise Duty is applicable only in an manufacturing scenario in India. I will illustrate with sone examples, as under:

Example 1:

Sales from Plant 'A', material 'B' (manufactured product) to Customer 'XYZ'.

Customer XYZ orders material 'B', which is supplied from plant 'A', say quantity 1. Sale Base Value is Rs. 100/-, Basic Excise Duty 10%, Education Cess 2%, Higher Education Cess 1%, Vat 12.5%

(Excise Duty will be applicable and reflect as a separate component in above scenario)

Example 2:

Stock Transfer from Plant 'A', material 'B' (manufactured product) to Plant 'D'.

Plant 'D' has a requirement for material 'B', which is supplied from plant 'A', say quantity 1. Assessable Value is Rs. 80/-, Basic Excise Duty 10%, Education Cess 2%, Higher Education Cess 1%

(Excise Duty will be applicable and reflect as a separate component, but Vat will not be applicable in above scenario)

Example 3:

Sales from Plant 'A', material 'B' (Trading product) to Customer 'XYZ'.

Customer XYZ orders material 'B', which is supplied from plant 'A', say quantity 1. Sale Base Value is Rs. 120/-, Vat 12.5%

(Excise Duty will not be applicable in above scenario)

Regards,

Rajesh Banka

[Former Member]

Hi Rajesh,

Thanks for the response.

Regards,