Central Excise Duty has to be distinguished from Sales Tax. Sales Tax is a tax on Sales and can be imposed only when there is a Sale. On the other hand, Excise Duty is a duty on the manufacture of the goods. So, duty can be imposed immediately after goods are manufactured. Whether these goods are sold are not is immaterial. For example: If a Company manufactures soap within the factory for its own use, there will be no sales tax on the soap. However, the soap will be liable to pay excise duty as it has been manufactured.
Under the excise laws, the following are the various types of duties, which are levied:
Basic Excise duty : Excise duty that is levied at the time of the Goods removal, either it is for sales or for own consumption.
Additional Excise Duty : Excise duty that is Levied to protect the local industries. This is varies depending on the products.
Special Excise duties :Excise duty that is levied in order control the competition between the states, for example, one state may give more subsidies in order to attract the investments or to encourage the industries of that state.
Additional Duty on specified items under the Act : If the Tariff Commission set up by law recommends that in order to protect the interests of industry, the Central Government may levy additional duties at the rate recommended on specified goods.
The Cenvat Credit in respect of inputs may be taken immediately on receipt of the inputs.
The Cenvat credit in respect of Capital Goods received in a factory at any point of time in a given financial year shall be taken only for an amount not exceeding fifty percent of the duty paid on such capital goods in the same financial year and the balance of Cenvat Credit may be taken in any subsequent financial year.
The Cenvat credit shall be allowed even if any inputs or capital goods as such or after being partially processed are sent to a job worker for further processing, testing, repair etc. and it is established from the records that the goods are received back in the factory within180 days of their being sent to a job worker.
Where any inputs are used in the final products which are cleared for export, the Cenvat Credit in respect of the inputs so used shall be allowed to be utilized towards payment of duty on any final product cleared for home consumption and where for any reason such adjustment is not possible, the manufacture shall be allowed refund of such amount.
How the Excise registers are using at Different Business Scenarios and How hese are updating.
Excise Laws require you to maintain a number of registers in a specified format relating to excise duty. They have to be printed out monthly and shown to the authorities in the event of an audit. The SAP captures this requirement.
Excise Registration ID’s A number assigned to each premises or location that has registered as a manufacturer with the excise authorities. Mention whether AED, SED, CESS applicable. If blank will not be available for inputs Max no. of line items in outgoing EI Permits deductible / non deductible ED at GR
Company Code Settings User can edit Dr account during JV Utilizes from PLA in JV First month for excise year Excise invoice selection
Plant Settings Plant defined as Depot or not Multiple plants to one Excise Registration ID GRs per EI can be set as below Multi GR – Multi Credit Multi GR – Single credit Single GR
Excise Groups Excise Reg ID linked to Excise group & Plant Depot definition at Excise Grp & Plant
Excise rate Determination Is the Customer SSI? Get SSI duty Rates. Yes No Excp rates Maintained? Yes No Get Excep duty rates Get Ch ID Of the material Get Customer Excise indicator Get plant Excise indicator Get final Excise indicator Get rate Based on Ex Ind & CH ID
To do this First we need to maintain the Values in table J_2IRG1BAL as follows.
Too print Excise registers use T.C. J2I6, System gives the all details of RG1 Register.
CENVAT Utilization Payment to be made to Excise Department for the Self –Removals for the last month. Utilization to be done against the last month’s incoming excise duties and CVD. CENVAT utilization to be done before the 5 th of next month.
CENVAT Availment and Utilization On-Line Transactions Fortnightly Transactions Credit CENVAT on-hold A/c Credit CENVAT A/c Debit ED Payable A/C Debit CENVAT A/c Debit PLA A/c Credit PLA A/c Credit ED Payable A/C Excise Duty Utilization Transaction Despatch Sales Excise Invoice Process Excise Duty Payable Account Goods Receipt Vendor Excise Invoice Process CENVAT on hold for Capital goods CENVAT Account Select Register PLA Account Deposit funds in PLA Account
Material Chapter ID + Excise Indicator Final = Excise Tax Rate
Refer Slide No.27
FI Entries related to Excise in SD During the passing of Billing document to Accounting: (VF02, Release to Accounting) Dr Customer Rs. 125/- Cr Sale Rs. 100/- Cr Excise Duty Recoverable Rs. 16/- Cr Taxes Rs.9/- During creation of Excise Invoice: (J1IIN) Dr Excise Duty Recoverable Rs.16/- Cr Excise Duty Payable Rs.16/- During Monthly Utilization: (J2IU) Dr Excise Duty Payable Rs. 16/- Cr CENVAT Clearing Rs.16/-
SPRO Financial Accounting Financial Accounting Global Settings Tax on Sale and Purchase Define Procedure
The various Condition types applicable in SD are:
Excise Conditions: JMOD, JSED, JAED , JCES, etc.
Tax Conditions:JIN1, JIN2,etc.
Excise Conditions are statistical. Since, these are determined from SD pricing procedure
Tax conditions are non-statistical. Since, these are determined from TAXINJ
While defining tax codes (using Transaction Code: FTXP), to maintain Excise Duty (JMOD) as a changeable field, remove statistical check and maintain 100% for JMOD. After the changes are made, one has to again put the statistical checks in procedure TAXINJ