FAQ9(ExciseforManufacturers):

HowtoaccountpurchaseofcapitalgoodsandavailCEVAT
Credit?WhatistheproceduretoadjusttheCENVAT
CreditofCapitalgoodstowardsServiceTaxliability?
CapitalGoods:
Capitalgoodsrefer to the means of production.Individuals, organizations and governments use capital goods in
the production of other goods or commodities. Capital goods include factories, machinery, tools, equipment, and
variousbuildingswhichareusedtoproduceotherproductsforconsumption
AsperExciseAct,onthepurchaseofCapitalgoodsatanypointoftimeinafinancialyearCENVATcreditshallbe
availed to the extent of50%of the Duty paid in the same financial year.The balance of CENVAT credit may be
availedinanyfinancialyearsubsequenttothefinancialyearinwhichthecapitalgoodswerereceivedinthefactory
ofthemanufacturer.
TheCENVATcreditinrespectofthecapitalgoodsshallbeallowedtoamanufacturerevenifthecapitalgoodsare
acquiredbyhimonlease,hirepurchaseorloanagreement,fromafinancingcompany
TheCENVATcreditinrespectofcapitalgoodsshallnotbeallowedifthemanufacturerclaimsdepreciationonthat
partofthevalueofsuchcapitalgoodsthatrepresentstheamountofdutyonsuchcapitalgoods.
TotakeaccountpurchaseofcapitalgoodsandavailCEVATCredit,followthestepsgivenbelow

Step1:CreateStockItem(CapitalGoods)
InF12:Configure(StockItemConfiguration)
SettheoptionAllowADVANCEDentriesinMasterstoYes
GotoGatewayofTally>InventoryInfo.>StockItem>Create
EntertheNameofthecapitalgoodsMachinery
SelecttheStockGroup,UnitofMeasurement,TariffClassification
EnabletheoptionSet/AlterExciseDetailstoYestoprovideexcisedetailsforthecapitalgoods

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InExciseDetailsscreen,selecttheExciseUnitName,ReportingUOMandenablethe
optionSet/AlterDutyDetailstoYes
InExciseDutyDetailsscreenenterthedutyapplicableforthecapitalgoodsasshownbelow

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InExciseDetailsscreen,selecttheoptionCapitalGoodsinStockItemTypefield

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Pressentertosavethestockitem.

Step2:CreateFixedAssetsLedger
CreatePlant&Machineryledger,groupunderFixedAssets.EnableVAToptionandselectVAT/Tax
ClassPurchaseCapitalGoods@4%


Step3:CreateVoucherClassforDebitNote
GotoGatewayofTally>AccountsInfo.>VoucherTypes>Alter
FromtheListofVoucherTypesselectDebitNote
IntheDebitNoteVouchertabdowntoNameofClassfield
IntheNameofClassentertheclassnameasCENVATAvailing

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IntheVoucherTypeClassscreensettheoptionUseClassforExcise/CENVATAdjustmentstoYes

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PressEntertosaveVoucherTypeClassscreenandVoucherTypeAlterationscreen.
Step4:CreateVoucherClassinJournalVoucher
GotoGatewayofTally>Accountsinfo.>VoucherTypes>Alter>Journal

TabdowntoNameofClassfield
EntertheNameofClassasCENVATCreditAdjustmentandpressEnter
InVoucherTypeClassScreen
SetUseClassforExcise/CENVATAdjustmenttoYes

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PressEntertoacceptandsave.
Step5:RecordaPurchaseVoucher
RecordthepurchaseofCapitalgoodsandselecttheExcisedutyLedgerstoaccountthedutyamount.
On capital goods purchases user can avail only 50% of the credit in current financial year and 50% should be
transferred to current asset account. Currently there is no provision to avail partial credit and transfer the balance
50%credittocontrolaccountinPurchaseVoucher.
Tosatisfyalltheaboveconditions,inpurchasevoucherselecttheExcisedutyledgersinsteadofCENVATledgers
sothat,thetotalexciseamountgetsallocatedtotheFixedAssetLedger.Laterbyrecordingaadjustmententrythe
credit amount can be transferred to a control account to claim 50% credit in current financial year and remaining
50%creditinsubsequentyears.

ThecompletedPurchaseVoucherisdisplayedasshown

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Step6:RecordJournalVouchertotransfertheeligiblecreditamountfromCapitalGoods(FixedAsset
Ledger)toCurrentAssetledger.
i.CreatetheCurrentAssetLedgerAvailableCENVATCreditonCapitalGoods
DebitAvailableCENVATCreditonCapitalGoodsledgerandinAmountfieldenterthetotalamountof
Eligiblecreditoncapitalgoods
CreditPlant&MachineryLedger(totransfertheCENVATCreditamountfromtheassetledger)toview
InventoryAllocationscreen
InInventoryAllocationscreen
InNameofItemfieldselectMachinery
InAmountfieldspecifyRs.1,64,800(thetotalcreditavailableonthecapitalgoods)

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Note:QuantityandRatedetailsarenotrequired.
CompletedJournalvoucherappearsasshown

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Step7:RecordaDebitNote(withCENVATavailingvoucherClass)toavail50%ofcreditinthecurrent
FinancialYear.
GotoGatewayofTally>AccountingVouchers>Ctrl+F9:DebitNote
InChangeVoucherTypescreeninClassfieldselectCENVATCreditAdjustmentfromtheVoucherClass
List
InExciseUnitfieldselectABCCompany
InNatureofPurchasefieldselectManufacturer

InDebitfieldselectBasicExciseDuty(CENVAT)toviewExciseDutyAllocationscreen
InExciseDutyAllocationscreen
oInTypeofRefselectNewRef
oInNamefieldenterthereferencenameusedinthepurchasevoucher
oInPartyNamefieldselectUniversalmanufacturersfromtheListofLedgerAccounts
oIntheNameofItemfieldselectMachinery
oInQuantityfieldenter1
oIntheAssessableValuefieldenterRs.10,00,000
Note:Asperlaw,only50%ofthedutypaidoncapitalgoodscanbeavailedasCENVATcreditinthesame
financialyearinwhichthecapitalgoodsispurchased.TocalculatethepartialCENVATCredithere,enterthecredit
amountinAmountcolumn.
ointheRatefieldtherateofdutydefinedintheledgerwillbedefaulted(iftherateofdutyisnot
definedduringledgercreationentertheapplicablerateofduty)
oEnterthedutyamountofRs.80,000inAmountfield

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InDebitfieldselectEducationCess(CENVAT)toviewExciseDutyAllocationscreen
InExciseDutyAllocationscreen
oInTypeofRefselectNewRef
oInNamefieldenterthereferencenameusedinthepurchasevoucher
oInPartyNamefieldselectUniversalmanufacturersfromtheListofLedgerAccounts
oIntheNameofItemfieldselectMachinery
oInQuantityfieldenter1
oIntheAssessableValuefieldenterRs.80,000

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Similarly,selectSecondaryEducationCess(CENVAT)andprovidetheexcisedetailsasshown

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InCreditfield,selectAvailableCENVATCreditonCapitalGoodsandpressentertoviewExciseDuty
Allocationscreen
InExciseDutyAllocationscreen
oSelectAgstRefinTypeofReffield
oInNamefieldselectbillSi/125/0910dated1752009(BasicExciseDuty@16%)fromtheListof
PendingTaxBills
oIntheAmountfieldenterRs.80,000(istheamountwhichisavailedasCENVATCreditagainst
theBasicExciseDuty)
oSelectAgstRefinTypeofReffield
oInNamefieldselectbillSi/125/0910dated1752009(EducationCess@2%)fromtheListof
PendingTaxBills
oIntheAmountfieldenterRs.1,600(istheamountwhichisavailedasCENVATCreditagainstthe
EducationCess)
oSelectAgstRefinTypeofReffield
oInNamefieldselectbillSi/125/0910dated1752009(SecondaryEducationCess@2%)fromthe
ListofPendingTaxBills
oIntheAmountfieldenterRs.800(istheamountwhichisavailedasCENVATCreditagainstthe
SecondaryEducationCess)
TheExciseDutyAllocationscreenappearsasshown

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Amountwillbedefaultedautomatically

ThecompletedDebitNotevoucherisdisplayedasshown

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Step8:RecordtheSaleofServices(SalesVoucher)
Recordthesalesofservices(ensuretherequiredledgersarecreatedwithappropriatesettings)

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Step9:RecordtheReceiptofPayment(ReceiptVoucher)
IncaseofServiceTax,liabilitytopayservicetaxarisesonlyonthereceiptofpaymentfromthecustomer.

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OnreceiptofpaymentfromthecustomertheservicetaxpayableamountwillbedisplayedintheServiceTax
Payable(BillDateWise)report

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Step10:RecordaCENVATAdjustmentJournaltoadjusttheCENVATCreditofCapitalGoodstowards
ServiceTaxPayable
ABCCompanyadjustsfullamountofServiceTaxPayablei.e.Rs.51500(ServiceTaxofRs.50000,Education
CessofRs.1000andSecondaryEducationCessofRs.500)towardsCENVATCreditofCapitalGoods.
TopassaCENVATAdjustmententry,gotoGatewayofTally>AccountingVouchers>F7:Journal
InChangeVoucherTypescreen,selectCENVATAdjustmentinClassfield.

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InUsedForfieldselecttheoptionCENVATAdjustmentfromExciseAdjustmentslist

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InExciseUnitfield,selectABCCompany
InDebitfieldselectOutputServiceTaxLedgerandpressentertoviewServiceTaxBillDetailsscreen
InTypeofReffieldselectAgstRefandselectSales/11billtoadjustthefullamountofRs51,500

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InCreditfieldselectBasicExciseDuty(CENVAT)andpressentertoselectexcisebills
InExciseDutyAllocationscreen
oTypeofReffieldwillbedefaultedtoAgstRef
oInNamefieldselectthebilltowardswhichtheservicetaxtobeadjustedselectSi/125/0910bill
(purchasebillnameofCapitalGoods)

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oInAmountfieldmentionRs50,000toadjusttowardsServiceTax

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oSelectEndofListandsavetheExciseDutyAllocationscreen
InCreditfieldselectEducationCess(CENVAT)andselectSi/125/0910andenterRs.1000toadjust
towardsEducationCessonServiceTax
Similarly,inCreditfieldselectSecondaryeducationCess(CENVAT)andselectSi/125/0910and
enterRs.500toadjusttowardsSecondaryEducationCessonServiceTax
SettheoptiontoProvideDetailstoYestoentertheAdjustmentPeriod

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ThecompletedCENVATAdjustmentJournalVoucherappearsasshown

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