User Manual For CENVAT Utilization

[Former Member]

In India, an excise tax is levied on the manufacture of goods when those goods leave the place of manufacturer and sold within the country. Formerly called the Central Excise Duty, this tax is now known as the Central Value Added Tax (CENVAT).

As a manufacturer of goods, company has to purchase raw material while purchase of such raw materials company need to pay excise duties on such materials further these materials get used for manufacturing of finish goods which then sold to customer with excise duty.The companies can set off input tax against output tax by paying balance to tax authorities.

Here I am putting some light on how to follow the process of CENVAT Utilization.

This is monthly activity and carried once in a month.

You can have the utilization according to plant and excise group which depends on how many plants and excise groups you have.Excise group and plant is assigned to each other, same excise group can be assigned to more than one plant.Give the inputs as I shown in the above screen shot and then execute.

In the upper section of above screenshot you can see payable amounts of BED,ECS and SECS, this payable amount you need to utilize as these are payable.

Available balance refers to the total balance of the particular account.Utilized refers to the amount which we need to utilize for the selected period.Remaining balance refers to amount which is remained after and before utilization.

You can see in account name column RG23A, RG23C etc it depends on your need from where you want to utilize.whereas RG23A is for raw material purchase, RG23C is for capital goods.In this document I have shown this process from RG23A.

Apart from above there are many cases where you need do some CENVAT Adjustment Posting for following purposes.

1) For Scrap: You follow this process if you have scrapped a material and want reverse the excise duty debited to your CENVAT account.

Go to J1IH :

Enter required data and select modvat/ cenvat account selection.

2) Material that you have not used in production.

You follow this process if you have not used material in the production and want to reverse the excise duty debited to your CENVAT account.

Go to J1IH:

Click on Matl non-prod

Follow the same process as mentioned in first step.

3) Additional excise paid by vendor.

you follw this process for if vendor has increased the amount of excise duty that it originally charged you and you want to debit the difference to your CENVAT account.

Go to J1IH:

Click on Additional excise

Follow the same process as mentioned above.

4) Money that you have transferred to your Personal Ledger Account.

You follow this procedure to make an adjustment posting when you transfer money to PLA.

Go to J1IH:

Click on TR6 Challan

Follow the same process as above mentioned.

5) Other Adjustment.

You follow this process if you want to make an adjustment posting that does not fall into any of the other categories of adjustment offered by this function.

Go to J1IH:

Click on Other Adj

Follow the same process as mentioned above.

I hope this will give light idea to new comers about the process of CENVAT utilization.

Regards,

Pankaj