Excise

[Former Member]

Dear Seniors,

Kindly tell me

1) What is CENVAT Determination and what is the use of it ?

2) What is acessable value and abatement percentage? for which kind of material, it will be applicable to ?

3) What is the difference between Excise duty and Cenvat ?

Regards,

JanaMM

[Former Member · Accepted solution]

Hi Jana

Here are ur answers for ur queries

1)Cenvat determination -You need to declare to excise authorities as to what input material your are consuming to produce a given output material .This is majorly used for only reporting purpose .i.e without maintaining the above you can go ahead with the excise processes

2)assesable value - It is the value of a material as assesed by an excise auditor ,This generally has a single value in a given financial year.its implications are :

1) while ceration a subcontracting challan the system picks the assesable value maintained in J1ID

2) While creating a outgoin excise invoice through J1IS ,with reference document type OTHR ,the system calculates the BED,ECS,SHCESS on the assesable value maintained in J1ID

3)Excise and Cenvat are one and the same .Donot confuse it with VAT as Cenvat has a part of the word vat in it.

Regards

Sandeep

[Former Member]

Dear Seniors,

Kindly give some replies for these 3 questions please.

Regards,

JanaMM

Edited by: JanaMM on Sep 30, 2009 9:34 AM

[former_member190537]

Hello,

1) What is CENVAT Determination and what is the use of it ?

Cenvat, or the Central Value Added Tax, is a component of the tax structure employed by many countries in the western section of Europe. The inspiration for Cenvat is derived from a tax system that is generally referred to as VAT, or a Value Added Tax. Both Cenvat and VAT are designed with the express purpose of minimizing a cascading effect when it comes to taxes on income, goods and services, and other forms of tax revenue. The aim of Cenvat is to aid in maintaining a tax structure that is considered equitable for both the citizens incurring the tax and the government that is collecting the tax revenue.

One notable example of Cenvat can be found in India. Originally designated as a modified value added tax, this approach placed some limits on the type of taxation that could occur on goods used in the manufacturing process of finished consumer products. Modvat was later designated as Cenvat, and continued to function as a means of promoting industry within the country while still receiving some form of tax revenue from the effort.

It is helpful to think of Cenvat as an incentive that encourages the production of goods within the country, rather than outsourcing the production to countries where the economic and tax climate is more favorable. By providing a credit on the taxes associated with materials used in the creation of finished goods, the government makes it more attractive for manufacturers to maintain operations within the country. This of course leads to the creation of more jobs for the citizens within the community and provides income for the purchase of products within the country. By reducing the tax burden for the end user of the materials, Cenvat opens the door to a more stable economy within the country, and a better standard of living for its citizens.

Under the best of circumstances, the application of Cenvat can accomplish three goals. First, the structure for Cenvat requires a tax collection procedure that is fairly transparent and easy to follow. Second, the benefits associated with Cenvat help to cut down on tax evasion and creative bookkeeping. Last, the use of Cenvat ultimately leads to an overall increase in collected tax revenues by keeping more citizens employed and thus able to pay taxes on salary and wages.

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 throug

2)Assessable value is the materials's Master price,,,That is upload in J1ID master data, while issue of material to different location then system will consider the ass value of the material from J1ID.

Abartment charge will act on Material's MRP this will decided by Govt on which material ABRT charge will act....

The Abartment charge is 38% on you material's MRP(Maximum retail price)

Regards

Mahesh Naik

[Former Member]

Hi

You can gor through the below link for CIN

http://help.sap.com/saphelp_erp60_sp/helpdata/en/09/ebf138cdd78a4be10000000a114084/frameset.htm

GKK