For credit of excise duty

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

07 April 2014 SUPPOSE A MACHINERY RS.455000 AND ON ITS EXCISE AND ADD.EXCISE TOTAL IS RS.109003 AND THIS MACHINE IS IN WARRANTY SO CO.CAME AND REPLACE PARTS OF MACHINERY BUT THEY ISSUED A CREDIT NOTE OF RS.455000 TO ME NOW QUESTION ARISE THAT HOW CAN I AVAIL THE EXCISE CREDIT UNDER EXCISE RULE BCOZ ACC.TO ACCOUNTING I HAVE NO MACHINERY IN MY BOOKS AS PER ABOVE CASE

PLEASE GIVE ME THE ANSWER FOR ABOVE QUERY WITH FULL ACCOUNTING TREATMNET AND WITH RULES OF EXCISE

ITS VERY URGENT

Querist : Anonymous

Querist : Anonymous (Querist)

08 April 2014 is there is no one who answer the above query?

Querist : Anonymous

Querist : Anonymous (Querist)

08 April 2014 this is unexpected from that no one who can answer this query

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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25 July 2024 In the scenario you described, where a machinery costing Rs. 4,55,000 was purchased along with excise duty and additional excise totaling Rs. 1,09,003, and later parts of the machinery were replaced under warranty resulting in a credit note issued for Rs. 4,55,000, here’s how you can avail the excise duty credit:

### Understanding the Situation:

1. **Original Purchase:**
- Machinery purchased: Rs. 4,55,000
- Excise Duty and Additional Excise Paid: Rs. 1,09,003

2. **Replacement under Warranty:**
- Parts of the machinery were replaced under warranty.
- Credit Note Issued: Rs. 4,55,000

### Availing Excise Duty Credit:

To avail the excise duty credit, you need to follow the provisions under the Central Excise Rules, 2002:

1. **Rule 16 of Central Excise Rules, 2002:**

According to Rule 16, when any excisable goods are removed from the factory or warehouse, and subsequently:
- They are found to be deficient in quantity, quality, or are otherwise not in accordance with the specifications, or
- They are returned by the buyer for any reason,

The manufacturer or producer of such goods may take credit of the duty paid on the goods, subject to certain conditions.

2. **Credit Note Issued:**

In your case, the supplier (company that sold you the machinery) issued a credit note for Rs. 4,55,000 due to the replacement of parts under warranty. This credit note effectively reduces the original transaction value of the machinery to zero in your books.

3. **Procedure to Avail Excise Credit:**

- **Documentary Evidence:** Maintain the credit note issued by the supplier as documentary evidence of the reduction in the transaction value.

- **Accounting Treatment:** In your books, the original machinery would have been capitalized at Rs. 4,55,000 including excise duty. Now, with the credit note issued, the transaction value is reduced to zero.

4. **Availing Excise Credit:**

- Based on the credit note, you can claim a refund or adjustment of the excise duty paid on the original purchase. This involves:
- Applying for refund or adjustment with the jurisdictional Central Excise authorities.
- Submitting necessary documents including the credit note, original invoice, proof of payment of excise duty, etc.

5. **Compliance and Documentation:**

- Ensure compliance with all procedural requirements specified under the Central Excise Rules for claiming credit/refund of excise duty.
- Maintain proper documentation and records to support your claim.

### Conclusion:

By following the provisions of Rule 16 of the Central Excise Rules, 2002, and maintaining proper documentation of the credit note issued for the machinery, you can avail the excise duty credit/refund. It's advisable to consult with a tax professional or accountant familiar with excise duty procedures to ensure accurate compliance and timely processing of your claim.

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