Annual Stock counting

[Sanjay Sharma]

Dear Experts,

 We have completed annual stock taking form 01/10/13 to 10/10/13 means we have not done any transaction in the inventory after 30^th Sep-13 in our excisable warehouse where all Cenvated inputs stored, after stock taking there is some negative variance(found short qty. of goods of some parts) in the excisable inventory and subsequently we got written off the value of the same negative inventory from the books of accounts.

 Specific questions

1. what is the provision in this regards as far as Central excise is concerned,
2. if there is any liability to pay the duty/amount on this inventory shortage then by when this liability should be discharged i.e whether this should be discharged on monthly basis on 6^th of Nov-13 as we have done the counting and subsequently found short inventory in the month of Oct-13 and write off the inventory value from the books of accounts or it should pay the day when we write off the inventory.

Pls. enlighten us with the relevant reference.

 

Regards,

Sanjay Sharma  

[Mahir S]

1)    Refer sub - rule 5(B) of rule (3) of  Cenvat Credit Rules, 2004.

2)   It is advisable to pay the same at the earliest, probably on the coming 6th Nov.13, with interest, and inform the department.

Also refer to decision in the case of PHILIPS CARBON BLACK LTD. Versus COMMISSIONER OF C. EX., BOLPUR  2013 (3) TMI 140 - CESTAT KOLKATA for clarity on the topic.

AI Summary

Cenvat credit reversal may require prompt payment with interest and departmental intimation after inventory shortages are found. Reply advises reversal or payment under Cenvat Credit Rules, 2004 (sub rule 5(B) of rule (3)), recommending prompt payment with applicable interest and departmental intimation at the earliest practical date, and cites a tribunal decision for further clarity on treatment of inventory shortages written off in accounts.