Write off RM, FG, WIP
This query is : Resolved
07 May 2010
We are loss making company for lost 5 year & written off all the stocks (RM, FG, WIP) in the books. is there any effect in excise with this transaction if effect is there how do it, please clarify.
14 May 2010
Please Relay
03 August 2025
Regarding the write-off of stocks (Raw Materials, Finished Goods, Work-in-Progress) in your excise records, here’s what you should know:
Excise Implications of Writing Off Stocks (RM, FG, WIP)
Stock Write-Off and Excise Duty Liability
Excise duty is generally payable on manufactured goods (Finished Goods).
If you write off Finished Goods (FG) due to loss, damage, obsolescence, etc., excise duty implications depend on whether duty was already paid or not.
Raw Materials (RM) and Work-in-Progress (WIP)
Excise duty is not applicable on Raw Materials and WIP as these are inputs or in-process goods.
So, writing off RM or WIP does not attract excise duty.
Finished Goods (FG)
If duty was already paid on Finished Goods and you write off the stock (due to loss/damage), you can adjust this stock in your records.
If you had paid duty earlier but now the goods are lost/written off, you can claim refund or drawback subject to proper documentation and rules.
If the goods were never cleared (sold), no additional duty is payable.
Procedural Requirements
Maintain proper records of the write-off: Stock registers, board resolutions, inventory valuation reports.
File appropriate excise returns reflecting the reduced stock.
In some cases, you may be required to inform the Excise Department about the write-off.
Follow guidelines as per Central Excise Act and rules.
Summary:
Stock Type Excise Duty Impact on Write-Off
Raw Material (RM) No excise duty involved; no impact
Work-in-Progress No excise duty involved; no impact
Finished Goods (FG) Excise duty paid earlier can be claimed back/refunded subject to rules; no fresh duty on write-off
Excise Implications of Writing Off Stocks (RM, FG, WIP)
Stock Write-Off and Excise Duty Liability
Excise duty is generally payable on manufactured goods (Finished Goods).
If you write off Finished Goods (FG) due to loss, damage, obsolescence, etc., excise duty implications depend on whether duty was already paid or not.
Raw Materials (RM) and Work-in-Progress (WIP)
Excise duty is not applicable on Raw Materials and WIP as these are inputs or in-process goods.
So, writing off RM or WIP does not attract excise duty.
Finished Goods (FG)
If duty was already paid on Finished Goods and you write off the stock (due to loss/damage), you can adjust this stock in your records.
If you had paid duty earlier but now the goods are lost/written off, you can claim refund or drawback subject to proper documentation and rules.
If the goods were never cleared (sold), no additional duty is payable.
Procedural Requirements
Maintain proper records of the write-off: Stock registers, board resolutions, inventory valuation reports.
File appropriate excise returns reflecting the reduced stock.
In some cases, you may be required to inform the Excise Department about the write-off.
Follow guidelines as per Central Excise Act and rules.
Summary:
Stock Type Excise Duty Impact on Write-Off
Raw Material (RM) No excise duty involved; no impact
Work-in-Progress No excise duty involved; no impact
Finished Goods (FG) Excise duty paid earlier can be claimed back/refunded subject to rules; no fresh duty on write-off
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