Debit Notes for Price difference / Shortage of quantity

[palaniappan thirukalathiappan]

Dear Sir,

Instance 1:

When the supplier has charged some excess rate for the exciseable raw material in the invoice, and for the price difference we will raise the debit note.

Instance 2:

When we received shortage of quantity of exciseable goods, we will raise debit note for the quantity short received.

query 1: Is the debit note should be raised only for the basic value alone or excise also needs to charged?

query 2: if the excise duty needs to be charged on the debit note, the same is not available for CENVAT to the supplier, as debit note is not an valid document for availing CENVAT?

query 3: Can we claim full amount of excise as CENVAT as per the original invoice of supplier?

 

Thanks.

[palaniappan thirukalathiappan]

Dear Experts,

Kindly suggest for my issue regarding the central excise, as below.

Awaiting for your valuable solutions.

Thanks.

[Vinay Sharma]

Query 1- Debit note should be raised for basic amount and sales tax only in case of price difference. In case of Short receipt of material you should raise debit note with Excise duty and Sales Tax as you are not entitled to take cenvat credit of materil short received/Not received.

Query 2 - Debit note is not a valid document for taking credit. In first case there is no loss duty to any party but in 2nd case i.e. short receipt of material the supplier will bear the loss of duty.

Query 3- Yes in first case and No in 2nd case.

The reply is based on a departmental circular which permits non reversal of CENVAT on price difference cases.  

 

 

[YAGAY andSUN]

Well, you may avail the CENVAT credit to the extent of goods physically received by you in your factory premises and for the differential excise duty you or your supplier may seek refund under Section 11B of the C.E.Act.

In case of variation in the price, you may avail the full CENVAT credit and bring it to the knowledge of the Central Excise Department and raise the debit note for basic amount.

 

AI Summary

CENVAT credit entitlement depends on goods received; debit notes for price variations and shortages have different excise and credit consequences. For price variations, raise a debit note for the basic value (and sales tax); departmental practice allows non-reversal of CENVAT and the recipient may avail CENVAT, subject to notifying Central Excise and issuing the debit note. For shortages in quantity, raise a debit note including excise duty and sales tax because CENVAT is not available for goods not received; the supplier bears the duty loss and debit notes are not valid documents for taking CENVAT. Differential excise may be recovered through a refund remedy.