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Excise Duty

Hi sap gurus,

What is Excise duty. where it is used.

what is CENVAT.

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2 Answers

  • Jul 21, 2008 at 07:20 AM

    Dear sabina

    The amount the manufacturers pay to Central Excise when they move any goods from their plant is called Excise Duty.

    In India, an excise tax is levied on the manufacturer of goods when those goods leave the place of manufacture. Formerly called the Central Excise Duty, this tax is now known as the Central Value Added Tax [(CENVAT)] Manufacturers may offset duty paid on materials used in the manufacturing process by using that duty as a credit against excise tax through a process known as Central Value Added Tax Credit (CENVAT Credit). The offsetting process was formerly known as Modified Value Added Tax (MODVAT).


    G. Lakshmipathi

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    Former Member
    Jul 21, 2008 at 07:24 AM

    Excise Duty is a Tax applicable for Manufacturing Companies. In SAP it is known as CIN (Country India Version).

    CENVAT refers to calculation of Excise Duty payable by Manufacturer to Government. The System is Manufacturer collected Taxes from Sales & also remits Excise Duty when making Purchases from Manufacturer. In CENVAT Utilization the calculation done is :

    Excise Duty Tax Collected from Sales Rs. 100/-

    Less - Excise Duty Tax Paid for Purchases Rs. 30/-

    Excise Duty Payable to Government is Rs. 70/-

    Hope the above explains the concept.


    Rajesh Banka

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