on 02-03-2009 6:08 PM
gurus kindly tell me what is meant bu cenvat utilization. why we need to do this process. Is it mandatory process for excise?
Dear Shiva
In India, an excise tax is levied on the manufacturer of goods when those goods leave the place of manufacture. Formerly called the Central Excise Duty, this tax is now known as the Central Value Added Tax (CENVAT).
Manufacturers may offset duty paid on materials used in the manufacturing process by using that duty as a credit against excise tax through a process known as Central Value Added Tax Credit (CENVAT Credit). The offsetting process was formerly known as Modified Value Added Tax (MODVAT).
thanks
G. Lakshmipathi
You must be a registered user to add a comment. If you've already registered, sign in. Otherwise, register and sign in.
Dear Shiva
Very good question
Both are different.
Assessee can avail credit of duty/ service tax paid on inputs and input services. This credit is known as u2018Cenvat Creditu2019.
Credit of basic duty, AED, Special Excise Duty and service tax can be utilised for payment of basic excise duty on final products. This is called Cenvat utilisation.
In short, Cenvat credit is used in MM (goods incoming) process while Cenvat utilisation is used in SD (goods outgoing) process.
On your second question Is it mandatory process yes it is mandatory.
thanks
G. Lakshmipathi
Thank lakshmipathi for reply once more. so tell me what we call the tax that we pay for the raw materials we pay to the government. is this the work of mm people to take care.
can please kindly explain further if you have time of the following sentences.
In short, Cenvat credit is used in MM (goods incoming) process while Cenvat utilisation is used in SD (goods outgoing) process.
Dear Shiva
Yes whatever duty to be accounted while procuring any components into a manufacturing unit has to be addressed by MM people.
On your second requirement, I will try to explain with an example
Assume that we have input credit of INR 80,000.00 in our account. As and when despatches are taking place, you can utilise this value till it reaches. By this, let us assume, you have utilised INR 70,000.00. So the balance in credit is INR 10,000.00 Now a despatch is taking place where you need to pay duty amount of INR 20,000.00.
Since you have credit of only 10,000.00 you need to pay the balance by way of PLA through your bank account to Central Excise.
Normally, if your exports is more than domestic sales, then this situation will not arise because, duty amount on sales will be less. On the other hand, if your domestic sales is on the higher side than exports, then at times, manufacturers will be paying the difference by PLA.
Hope to have explained clearly.
thanks
G. Lakshmipathi
Hi
CENVAT Means - the assessee has to obtain a duty paid invoice from the consignor and then he can take credit of such duty amount in the account maintained for this purpose and the same can be utilized by him for the payment of the duty on the goods from his factory. This credit is called CENVAT.
Scene
Just think over a product which is reached to a end user, how many manufacturing activities are done.So to reduce the tax burden of the end user, the Govt. of India introduce the MODVAT scheme which is now called CENVAT scheme
.
For example:
CENVAT availed at the time purchased various goods Rs.20,000 (EXcise duty alone)
CENVAT payable for his product at the time sales Rs.25,000
He will pay only Rs.5000 through cash deposit in PLA.
This customizing are in SAP CIN Module. If you are having the CIN SD, go through.
regards
You must be a registered user to add a comment. If you've already registered, sign in. Otherwise, register and sign in.
User | Count |
---|---|
91 | |
10 | |
10 | |
6 | |
5 | |
5 | |
5 | |
3 | |
3 | |
3 |
You must be a registered user to add a comment. If you've already registered, sign in. Otherwise, register and sign in.