Modvat- Cenvat on material

[Former Member]

Hi all i am new to the module.

I just wanted to know some details about the cenvat concept.

I know cenvat is basically used to avoid double taxation on an item.I just wanted to know how does the calculation and posting of cenvat and other related taxes are posted in system.

If buyer purchased good for 100 RS with BED 16% i.e 16 Rs is the BED . now after processing the cost of the product comes out to be 150.

Now in this case what is the CENVAT.How much amount do manufacturer will get back.

Thanks and regards,

Ashutosh

[Former Member · Accepted solution]

Hi Ashutosh,

Welcome to MM module, see there are two type of excise is levied on the product 1. which can be claimed 2. which can not be claimed and then later on it gets added to the material value. In you case if BED is 16% then you can claim 16 rs if its claimable in SAP knowns as Deductible and if its not then material will cost you of rupees 116.

Now after manufacturing yo said your cost of material is 150 rs now you calculate the 16% on that which comes 27 rs so at the time of sale you get this amount of duty from your customer. So Govt rules states that whatever duty you have paid at the time of purchase you can get set off from the duties at the time of sale. so in your case as you have already paid rs 16 and 27-16=11rs are supposed to be paid by you to goverment.

Following are kinds of excise registers

RG23A -For rawmaterials

RG23C-for Capital goods

RG1-finished goods

The above are movements of excisable goods maintained in a plant.

RG23D-

This is movements of excisable goods maintained in a depot.

PLA-Personal ledger account

This is the bank account from which you transfer any money owing to the excise authorities.

Register RT-12

This is a monthly report that summarizes the CENVAT and PLA information from the other registers.

Part1 entry-

it will depict quantity or the volume of goods movement

Part2 entry-

accounting entries will be captured

Hope this would have sloved you r query

Regards

Vivek

-- Reward for the Effort !!

[Former Member · Accepted solution]

Hi Supergene, thanks you for replying that is really very helpful to me .

Just want to add one more thing as in case we have mentioned raw material cost is 100. Now if my my value addition is Rs 50 , so what will be the final cost of product whether its 100 + 50 or 100+ 16%bed+ 1%cess or only 100+ 50.

Thanks and regard, points rewarded.

Ashutosh

[Former Member · Accepted solution]

Hi Ashutosh

You will pay to vendor no doubt 150 rs only. But here if you say your total excise component is 50 that you can get back as per rule of excise only, if you are using your purchased material into manufacturing. So at the time of selling that finished product to customer.On the total selling cost of material you will levi excise

Suppose your finished product cost is 1000

Excise Duty 160 rs

So on this excise duty of rs 160 you will get your 50 bucks at the time of selling and rest of duty goes to excise deparment.

Regards

Vivek

-- Reward for the effort !!

[Former Member · Accepted solution]

Hello Ashutosh

Ur purchase price is say 100 + 16 bed + 2 ecess= 118

your material cost will be 100 and 18 rs will be ur cenvat

you have added 50 rs value to ur product

so the cost will be 150 Rs for finished good

At the time or GR (Migo)

100 Material cost

-100 Gr ir clearing account

Acc when u take credit (J1iex_p)

16 Bed Account

2 Ecess Account

-18 Modvat clearing acc

At time of IV

-118 Vendor Account

100 GR IR clearing account

18 Modvat clearing acc

Now u do the production and add 50 Rs

Ur cost of the product is 150 Rs

Say u sell the product for 200 Rs

time of issue or out going invoice account

-32 bed sales account

-4 Ecess sales account

36 Suspence account

and at the time of belling suspance account will be credited

and the at the end of teh month u will do monthly utilization J2iun

-32 bed sales account

-4 Ecess sales account

16 Bed Account

2 Ecess Account

16 PLA bed

2 PLA Ecess

As the diddrence is payed to Govt through TR6 challan to PLA account

Hope u got it what is cenvat creadit and utilization

Regards

Umakant

[Former Member]

Hi Tosh,

well to start with Excise Duties let me set you an example :

You are producing a product with a raw material and sell it in market as finished good.

Now for the product you need raw material say its costing 100/- on which you pay 16% tax which is 16/-.

You are producing the finished goods with your cost inclusion of say 50/-.

Now the inhouse product cost is 100/-(raw matrl) and processing cost of 50/- which is 150/-.

You sell your product in the market at 16% tax on it, so your product market value becomes 150/- + 16%(on 150/-).

Excise duties are handled like this :

as you buy raw matrl at duty 16/- this will be taken as CENVAT into your account. so you have 16/- in your account.

as you sell matrl with duty 24/- you need to pay excise of 24/- Since you have 16/- in your hand need to pay Excise Amount to Gov't ( 24-16) : 8/-

The excise records are maintained for these as :

Raw matrl purchase and issues to production : Maintained in RG23A register, of which Part I is for quantity and Part II is for amount(Cenvat amt)

Production details are maintained in RG1 Register, including despatch details and balances.

The excise duty payable to Gov't is maintained in Personal Ledger Account (PLA).

The total monthly report of purchase production despatches - quantity/value is submitted to Excise Dep't via RT-12.

Hope this gives a clear picture.

Have a nice time as these are basics of Excise, and its a vast area to learn.

Credit if possible.

Thanks

Anand