Cenvat Credit Balance Mismatch Between ER-1 & Balance Sheets

[Chetan Pawar]

Dear Experts,

As per our Company Policy, we have taken 100 % Credit of all Input in excise Cenvat Credit Register & but in accounts(Balance sheet) we have taken only 50 % and remaining we have expense out as material cost. Hence our Cenvat Credit Balance are always mismatch between ER-1, ST-3 & Balance Sheet. illustration . we purchase the input Amount of ₹ 100 + Excise Duty 12.50 %+vat 5% = ₹ 118.12 but in Excise Records we have talken fully credit i.e. ₹ 12.50 but in accounts we have taken cenvat only ₹ 6.25, remaining are in added in Ass.Value means purchase cost while booking.

The same has been Approved by our Auditors CA firm & reflect in his 3CA report with Notes..

Can anyone tell me what is the legal bonding for that and is it right to do the same way

or is their any possibilities to object by Service tax and central excise Department while auditing

Thanks & Regards,

Chetan Pawar

AI Summary

Company Faces Cenvat Credit Discrepancy: 100% Claimed in Register, 50% in Accounts. Legal Advice Sought on Permissibility. A company is experiencing a mismatch in Cenvat Credit balances between their ER-1 returns and balance sheets due to their policy of taking 100% credit for inputs in the Cenvat Credit Register but only 50% in the accounts, with the remainder expensed as material cost. This discrepancy is approved by their auditors and noted in the 3CA report. The query seeks legal advice on whether this practice is permissible and if it might lead to objections from the Service Tax and Central Excise Department during audits. A response suggests that statutory returns should be reconciled with financial records to avoid potential issues.