Differential money can be adjusted with Cenvat credit.

[Samik Chaudhuri]

Sir

Our manufacturing co produces MRP based product but invoices were not made following the MRP based rules i.e. abatement due to lack of knowledge now the Excise Deptt. can ask to deposit the differential duty with interest on cash or adjusted the differential duty with Cenvat credit and pay the interest in cash. Please answer me at earliest.

With thanks and regards

Samik Chaudhuri.

[DR.MARIAPPAN GOVINDARAJAN]

Your query is not clear. The differential duty with interest may be paid either by cash or adjusting with CENVAT credit.

[Rajagopalan Ranganathan]

Sir,

If duty paid on transaction value is less than duty payable on MRP, then the department can ask you to pay the differential duty with interest. In that case you can pay duty by utilising the credit available in your credit account. However, interest has to be paid in cash only since interest cannot be paid through credit account

[DR.MARIAPPAN GOVINDARAJAN]

The views of Shri Rajagopalan is correct. I have erred in telling that interest may be adjusted with CENVAT credit.

[Mahir S]

Sir,

It is advisable to urgently issue supplementary invoice showing proper abatement and reverse the differential cenvat credit.

Also pay up the interest amount by e challan as explained above.

AI Summary

Manufacturing company can adjust differential duty with Cenvat credit but must pay interest in cash per MRP rules. A manufacturing company faced an issue with incorrect invoicing based on Maximum Retail Price (MRP) rules, leading to a potential demand from the Excise Department for differential duty with interest. The company inquired whether the differential duty could be adjusted using Cenvat credit, while paying interest in cash. Respondents clarified that while the differential duty can be adjusted with Cenvat credit, interest must be paid in cash. Additionally, it was recommended to issue a supplementary invoice reflecting proper abatement and to reverse the differential Cenvat credit, paying the interest via e-challan.