Import of excisable goods
This query is : Resolved
22 February 2010
Kindly anyone send me step by step accounting entries in case of import of excisable goods (Including customs and CVD)
Q (1) Accounting entry at receiving invoice of custom vendor.
Q (2) Accounting Entry at receiving of material vendor.
Q (1) Accounting entry at receiving invoice of custom vendor.
Q (2) Accounting Entry at receiving of material vendor.
22 February 2010
u can email me regarding the captioned subject.
ramesh.arti@yahoo.co.in
ramesh.arti@yahoo.co.in
28 July 2024
When importing excisable goods, it’s essential to account for various components such as customs duty, countervailing duty (CVD), and other charges. Here’s a step-by-step guide to the accounting entries for the import of excisable goods, including the entries at receiving the invoice from the customs vendor and the material vendor.
### **1. Accounting Entries at Receiving Invoice from Customs Vendor**
When you receive the invoice from the customs vendor, you need to account for the following components:
- **Customs Duty (CD)**
- **Countervailing Duty (CVD)**
- **Additional Customs Duty (ACD)**
- **Any other charges (e.g., port handling, transportation)**
#### **Example:**
**Assumptions:**
- Customs Duty: ₹10,000
- CVD: ₹5,000
- ACD: ₹2,000
- Port Handling Charges: ₹500
- Total Invoice Amount: ₹17,500
**Entries:**
1. **Customs Duty and Other Charges:**
```plaintext
Dr. Customs Duty Expense ₹10,000
Dr. CVD Expense ₹5,000
Dr. ACD Expense ₹2,000
Dr. Port Handling Charges ₹500
Cr. Customs Payable/Bank ₹17,500
```
**Explanation:** The customs duty, CVD, ACD, and port handling charges are recorded as expenses. The total amount is credited to the Customs Payable account or Bank if already paid.
2. **To Record Customs Duty in Excise Duty Account:**
If the customs duty is eligible for credit under excise rules, you should also record it in the Excise Duty Receivable account.
```plaintext
Dr. Excise Duty Receivable ₹10,000
Cr. Customs Duty Expense ₹10,000
```
**Explanation:** This entry records the customs duty as receivable if you are eligible to claim a credit.
### **2. Accounting Entries at Receiving Material from Vendor**
When you receive the material, the accounting entries would reflect the cost of the goods including the duties and charges.
#### **Example:**
**Assumptions:**
- Material Cost: ₹50,000
- Customs Duty: ₹10,000
- CVD: ₹5,000
- ACD: ₹2,000
- Port Handling Charges: ₹500
- Total Cost: ₹67,500
**Entries:**
1. **Receiving Material Invoice:**
```plaintext
Dr. Inventory/Stock ₹50,000
Dr. Customs Duty Expense ₹10,000
Dr. CVD Expense ₹5,000
Dr. ACD Expense ₹2,000
Dr. Port Handling Charges ₹500
Cr. Accounts Payable/Bank ₹67,500
```
**Explanation:** The inventory account is debited with the material cost, and the respective expense accounts are debited with the applicable duties and charges. The total amount is credited to Accounts Payable or Bank if already paid.
2. **To Record Excise Duty Receivable:**
If the customs duty and other related duties are eligible for input credit, the following entry can be made:
```plaintext
Dr. Excise Duty Receivable ₹10,000
Dr. CVD Receivable ₹5,000
Dr. ACD Receivable ₹2,000
Cr. Customs Duty Expense ₹10,000
Cr. CVD Expense ₹5,000
Cr. ACD Expense ₹2,000
```
**Explanation:** This entry reflects the receivables if you are eligible to claim input credit for the duties.
### **Summary**
- **Receiving Invoice from Customs Vendor:** Record duties and charges as expenses and/or payables.
- **Receiving Material from Vendor:** Record the material cost and related duties as inventory cost or expenses and credit payables or bank accounts.
- **Excise Duty Receivable:** If applicable, record the duties as receivables if eligible for input credit.
Ensure you comply with the local regulations and accounting standards, and consult with a professional accountant or tax advisor for specific scenarios and complex transactions.
### **1. Accounting Entries at Receiving Invoice from Customs Vendor**
When you receive the invoice from the customs vendor, you need to account for the following components:
- **Customs Duty (CD)**
- **Countervailing Duty (CVD)**
- **Additional Customs Duty (ACD)**
- **Any other charges (e.g., port handling, transportation)**
#### **Example:**
**Assumptions:**
- Customs Duty: ₹10,000
- CVD: ₹5,000
- ACD: ₹2,000
- Port Handling Charges: ₹500
- Total Invoice Amount: ₹17,500
**Entries:**
1. **Customs Duty and Other Charges:**
```plaintext
Dr. Customs Duty Expense ₹10,000
Dr. CVD Expense ₹5,000
Dr. ACD Expense ₹2,000
Dr. Port Handling Charges ₹500
Cr. Customs Payable/Bank ₹17,500
```
**Explanation:** The customs duty, CVD, ACD, and port handling charges are recorded as expenses. The total amount is credited to the Customs Payable account or Bank if already paid.
2. **To Record Customs Duty in Excise Duty Account:**
If the customs duty is eligible for credit under excise rules, you should also record it in the Excise Duty Receivable account.
```plaintext
Dr. Excise Duty Receivable ₹10,000
Cr. Customs Duty Expense ₹10,000
```
**Explanation:** This entry records the customs duty as receivable if you are eligible to claim a credit.
### **2. Accounting Entries at Receiving Material from Vendor**
When you receive the material, the accounting entries would reflect the cost of the goods including the duties and charges.
#### **Example:**
**Assumptions:**
- Material Cost: ₹50,000
- Customs Duty: ₹10,000
- CVD: ₹5,000
- ACD: ₹2,000
- Port Handling Charges: ₹500
- Total Cost: ₹67,500
**Entries:**
1. **Receiving Material Invoice:**
```plaintext
Dr. Inventory/Stock ₹50,000
Dr. Customs Duty Expense ₹10,000
Dr. CVD Expense ₹5,000
Dr. ACD Expense ₹2,000
Dr. Port Handling Charges ₹500
Cr. Accounts Payable/Bank ₹67,500
```
**Explanation:** The inventory account is debited with the material cost, and the respective expense accounts are debited with the applicable duties and charges. The total amount is credited to Accounts Payable or Bank if already paid.
2. **To Record Excise Duty Receivable:**
If the customs duty and other related duties are eligible for input credit, the following entry can be made:
```plaintext
Dr. Excise Duty Receivable ₹10,000
Dr. CVD Receivable ₹5,000
Dr. ACD Receivable ₹2,000
Cr. Customs Duty Expense ₹10,000
Cr. CVD Expense ₹5,000
Cr. ACD Expense ₹2,000
```
**Explanation:** This entry reflects the receivables if you are eligible to claim input credit for the duties.
### **Summary**
- **Receiving Invoice from Customs Vendor:** Record duties and charges as expenses and/or payables.
- **Receiving Material from Vendor:** Record the material cost and related duties as inventory cost or expenses and credit payables or bank accounts.
- **Excise Duty Receivable:** If applicable, record the duties as receivables if eligible for input credit.
Ensure you comply with the local regulations and accounting standards, and consult with a professional accountant or tax advisor for specific scenarios and complex transactions.
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