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.

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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.

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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.

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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 :

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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


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32 Comments

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  1. Jyoti Prakash

    Pankaj,

    It would be great for other, if you add some text to explain essence of CENVAT Utilization & what each screenshot means. The people who are aware of this, many might ignore the document, as nothing new for them. If you improve the document, definitely a great help to beginners.

    As this a Global platform, this definitely give chance to share & demonstrate your document creation ability & knowledge.

    Best Wishes. JP

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          1. Jyoti Prakash

            Nice to see some changes made by you. Frankly, still the essence of sharing the screenshot is missing.

            For example, you can write & explain about different the fields in the screenshot like available amount, utilised & rem balance and value flows to fields, means source of the field. These sort of value addition your document will definitely help others.

            In fact, somewhere you have to differentiate your level of understanding & way of documentation.

            For your reference, refer following SAP Help link:

            CENVAT Adjustment

            Thanks.

            Best Wishes,

            JP

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  2. manu m

    Good One. Could please prepare a  Pre Requisite for Utilization.

    For example – I do Purchase and Cenvat is CR and Excises are posted and Do the sales and Cenvat  Dr posted for all excises. Is this all about to be done ?What else to be done ? elaborate the real Business process 

    Also to the same Doc, What is the relevance of Available , Utilized , balance .How Account Name is picked like BED, ECS etc

    The Doc is excellent but will be gr8 if maintained the relevance, Business scenario(Not  system side doing) etc .

    Thanks

    Manu

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      1. manu m

        Hi Pankaj,

        I really appreciate your positive attitude in taking things correctly and helping us.

        two  question for you,

        1.Is RG23A only for Raw Materials ? We maintain RG23A for DLFC also rt ?

        2.Do excise posting at sales and purchase is enough ? Is anything I need to do ? . My Question is like if I do sales and Pur. posting excise , Do I Get all the Data available in your utilization screen shown above ? and I can do the utilization ?

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        1. pankaj labhasetwar Post author

          Hi Manu,

          1) RG23A Is only for raw material purchase whereas DLFC is stands for Goods Removal through Sales.

          2) yes but there are different registers according to sale and purchase process whatever you carry the transaction it will update respective G/Ls and registers.

          e.g. RG23A- raw material purchase, RG23C- capital goods, RG1- domestic and export sale, RG23D- depot sale.

          Hope this will clear your idea.

          Regards,

          Pankaj

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          1. manu m

            Thank you pankaj,

            Could be  a bad question, But  want to understand the business

            When you reconciled for BED

            BED payable amount – 121,246,00

            Available Balance -10,781,507,00 @RG21A

            and Amount Utilized is 121,246,00@ RG23A

            What is reconciled ?.Per me Input Purchase CR is reconciled with Output Sales Dr.

            I see no sales Register (as per you its only RG1) . what is reconciled here .

            Please explain . Again , I asking just to make things clear and help to all . Kindly don’t take it a bad way .

            Also give a heads up – How Amount payable is reached ( give an example )

            How Amount Balance is achieved ( give an example )

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            1. pankaj labhasetwar Post author

              Hi manu,

              we can utilize that payable amount from any account whether it is RG23A, RG23C it depends on your requirement and as I have mentioned this in the document.

              Whereas I said RG1 refers to domestic and export sale.

              Here payable amount is coming and then we are utilizing this from RG23A or C accordingly.

              Input duties against output duties.

              Thanks

              Pankaj

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  3. Manikanthan Venkateswaran

    Wow Pankaj. Wonderful Document and great spirit of knowledge share.

     

    There are two parts to this one..

     

    1. Utilization thru J2IUN
    2. Clearing of the Credits and Debits in the respective Output Liability (1000 line items) and Input Credit GL Accounts (500 line items)..

    When I do the J2IUN, i am adjusting Amt against Amt. However, what will happen to the 1000 open items in the Output Liability GL Accounts and the 500 open items in the Input Credit Accounts? Will they get cleared automatically? I don’t think so because the System does not know which combinations of the line items to consider to arrive at the CLEARING BATCH (the list of Dr and Cr lines to be cleared for this particular cycle)..

    Your clarification will be hugely helpful

     

    best regards

    v manikanthan

     

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