Treatment of Debit/Credit Note in Excise records
This query is : Resolved
09 July 2009
Hi all,
i want to know that what treatment should in Excise record of Debit/Credit Note.
eg. i have billed to party with excess amount and invoice contaning Excise duty and sale tax as well, later on i realized that it was excess billed, hence i raised a credit note to party as a result now my excise duty become lesser than earlier billed amount.
now i want to know can i take cenvat credit or reduce my excise expenses in excise records on basis of this credit note? if yes kindly let me know under which provision?
Please help ASAP.
i want to know that what treatment should in Excise record of Debit/Credit Note.
eg. i have billed to party with excess amount and invoice contaning Excise duty and sale tax as well, later on i realized that it was excess billed, hence i raised a credit note to party as a result now my excise duty become lesser than earlier billed amount.
now i want to know can i take cenvat credit or reduce my excise expenses in excise records on basis of this credit note? if yes kindly let me know under which provision?
Please help ASAP.
12 July 2009
Excise duty credit would not be admissible. If you were to take a certificate that the duty credit has not been availed by the cusotmer then possible refund application can be made. Unless amount subsntantial forget about it.
15 July 2009
please let me know the rule or circular or any notification.
02 August 2025
Here’s a detailed explanation regarding **treatment of Debit/Credit Notes in Excise records**:
---
### Scenario Recap:
* You issued an invoice with **Excise Duty and Sales Tax**.
* Later realized the billing was **excess**.
* Raised a **Credit Note** to adjust the excess.
* As a result, your **Excise Duty liability reduces**.
* You want to know if you can adjust Excise duty paid earlier (reduce expenses or take CENVAT credit).
---
### Treatment of Debit/Credit Notes in Excise Records:
#### 1. **CENVAT Credit Adjustment:**
* **CENVAT Credit can only be availed on actual duty paid.**
* If you have already paid Excise duty on the excess invoice amount and taken CENVAT credit on that, but then you issue a credit note reducing the value, you **cannot simply reverse the CENVAT credit** without certain conditions.
* You **cannot take additional CENVAT credit** on the reduced duty amount again.
* **If CENVAT credit was availed earlier on the excess amount, you must reverse the credit proportionately.**
#### 2. **Reduction of Excise Duty Liability:**
* Since the credit note reduces your sales value and thus excise duty payable, you must **adjust your Excise duty liability accordingly**.
* You **cannot treat the reduction as an expense**; it’s a liability adjustment.
* If the excise duty was already paid, you can **file a claim for refund or adjustment** under the Excise laws if you fulfill the criteria.
* However, **refunds are not automatic**; you need to comply with procedures, and the amount must be substantiated.
#### 3. **Documentation and Compliance:**
* You must maintain proper **documentary evidence** for credit notes issued.
* The **Excise authorities require proof that the duty was paid on the original invoice and that credit notes are genuine adjustments.**
* If the credit note relates to excise duty, you need to issue proper **adjustment entries in your Excise records**.
---
### Relevant Rules/Notifications:
* **CENVAT Credit Rules, 2004:** Governs credit availment and reversal.
* **Rule 11(2) of CENVAT Credit Rules:** Provides for reversal of credit on returns or in case of certain transactions.
* **Excise Circulars** often clarify treatment for credit notes — but no universal circular guarantees automatic credit/reversal without conditions.
---
### Practical Steps:
* Check if **CENVAT credit was availed on the excess amount**.
* If yes, **reverse the CENVAT credit proportionally** while filing your returns.
* Adjust the excise duty liability accordingly.
* If duty was already paid, consider applying for **refund or adjustment** as per procedure.
* Keep proper records of credit notes and adjustments.
---
If you want, I can help you draft the journal entries or filing procedure based on your exact situation.
---
**In brief:**
You **cannot just reduce excise expenses** on basis of credit note; you need to adjust liability and reverse CENVAT credit if already availed. Refund claims are possible but procedural.
---
Would you like help with sample entries or relevant circular references?
---
### Scenario Recap:
* You issued an invoice with **Excise Duty and Sales Tax**.
* Later realized the billing was **excess**.
* Raised a **Credit Note** to adjust the excess.
* As a result, your **Excise Duty liability reduces**.
* You want to know if you can adjust Excise duty paid earlier (reduce expenses or take CENVAT credit).
---
### Treatment of Debit/Credit Notes in Excise Records:
#### 1. **CENVAT Credit Adjustment:**
* **CENVAT Credit can only be availed on actual duty paid.**
* If you have already paid Excise duty on the excess invoice amount and taken CENVAT credit on that, but then you issue a credit note reducing the value, you **cannot simply reverse the CENVAT credit** without certain conditions.
* You **cannot take additional CENVAT credit** on the reduced duty amount again.
* **If CENVAT credit was availed earlier on the excess amount, you must reverse the credit proportionately.**
#### 2. **Reduction of Excise Duty Liability:**
* Since the credit note reduces your sales value and thus excise duty payable, you must **adjust your Excise duty liability accordingly**.
* You **cannot treat the reduction as an expense**; it’s a liability adjustment.
* If the excise duty was already paid, you can **file a claim for refund or adjustment** under the Excise laws if you fulfill the criteria.
* However, **refunds are not automatic**; you need to comply with procedures, and the amount must be substantiated.
#### 3. **Documentation and Compliance:**
* You must maintain proper **documentary evidence** for credit notes issued.
* The **Excise authorities require proof that the duty was paid on the original invoice and that credit notes are genuine adjustments.**
* If the credit note relates to excise duty, you need to issue proper **adjustment entries in your Excise records**.
---
### Relevant Rules/Notifications:
* **CENVAT Credit Rules, 2004:** Governs credit availment and reversal.
* **Rule 11(2) of CENVAT Credit Rules:** Provides for reversal of credit on returns or in case of certain transactions.
* **Excise Circulars** often clarify treatment for credit notes — but no universal circular guarantees automatic credit/reversal without conditions.
---
### Practical Steps:
* Check if **CENVAT credit was availed on the excess amount**.
* If yes, **reverse the CENVAT credit proportionally** while filing your returns.
* Adjust the excise duty liability accordingly.
* If duty was already paid, consider applying for **refund or adjustment** as per procedure.
* Keep proper records of credit notes and adjustments.
---
If you want, I can help you draft the journal entries or filing procedure based on your exact situation.
---
**In brief:**
You **cannot just reduce excise expenses** on basis of credit note; you need to adjust liability and reverse CENVAT credit if already availed. Refund claims are possible but procedural.
---
Would you like help with sample entries or relevant circular references?
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