Clearance of material against Cenvat credit.

[GOUTAM GHOSH]

1) In a situation like:-

On 01.05.2011- there was no Cenvat Credit available or P.L.A. Balance. Materials had to clear involving Excise Duty 25000.

On 02.05.2011- Some credits were availed from purchase of inputs amounting to Rs. 30000.

Now question is- how duties on 01.05.2011's despatch will be adjusted? Can this duty be adjusted against Cenvat credit?

2) There is a balance of Rs. 25000 in PLA and RS. 30000 in CENVAT Credit.

A despatch is made involving duty Rs 45000.

Now the question is- whether a single despatch (invoice) can simultaneously be adjusted for Rs. 25000 in CENVAT and Rs 20000 in PLA?

Please advise.

[YAGAY andSUN]

1) Excise duty is payable once in a month unless untill there is an offence in this regard.

2) Yes, you can adjust the duty simultenously from PLA and Part II.

[Snehal Kulkarni]

If the Clearances are made on 01.05.2011, the liability of payment of excise duty will be due on 05-Jun-11.

What so ever Credit will be accumulated till 31-May-11, that can be utilised for payment of Excise Duty on Clearances made till 31052011. If there is short fall, you can made the payment through PLA.

 

You can adjust the Cenvat and PLA simultaneoutly for sinlgle/multuiple despatches.

[DEV KUMAR KOTHARI]

Replies given by Mr. Pradeep Khatri and Mangesh Lokre are correct. Excise duty payable on clearance during any month is generally payable in the next month. Therefore, credits in PLA as on closing day of month and  CENVAT credit eligilbe for adjustment ,as on the last day of the month can be adjusted agaisnt Excise Duty payable for the month. This is generla rule subject to exceptions, if any applicable in a given case.

AI Summary

Cenvat credit adjustment may be applied with PLA to meet excise liability for prior-month clearances. Excise duty on clearances in a month is generally payable in the next month; Cenvat credits and PLA balances available up to the last day of the clearance month may be used to discharge that liability, and a single dispatch's duty may be met by simultaneous adjustment from both Cenvat credit and the Personal Ledger Account, subject to applicable exceptions.