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

Differential duty adjustment can use CENVAT credit, but interest must be paid in cash.
Differential excise duty due to incorrect MRP-based abatement may be discharged by utilising available CENVAT credit for the duty component, but any interest on the differential is payable only in cash. Taxpayers should issue supplementary invoices to reflect correct abatement, reverse excess CENVAT credit, and pay interest separately (for example, via e-challan).