Own Consumption in Cement Industry From Manufacturing Plant

[Former Member]

Dear Experts,

I am in CEMENT implementation project. Currently clients wants to use their own CEMENT for their own use( like construction of own guest house, building etc.). So, I have to pass on the Excise Duty on Cement Trade scenario.

Excise duty calculation will be as under

1. Basic Excise duty will be applicable 70% of MRP

2. 120 PMT (AED )

3. Education cess @ 2%

4. S.H. education @ 1%

I am not able to map the above process from SD side. Please required help from EXPERTS.

Thanks

Santanu Giri

[Lakshmipathi · Accepted solution]

1. Have a separate document types (PO, delivery and billing) for this scenario
2. Have a tax code created in FTXP for an Account Key EXD with 70% and assign this to your excise condition type
3. Have one more condition type for AED and assign this next to your excise condition type in pricing procedure
4. Get the required G/Ls from Finance and assign the same in VKOA with the combination of Account Key EXD

Also if I am correct, the business process requires that the sale value should not get debited to any account in which case, you need to have one condition type for 100% discount.

G. Lakshmipathi

[Former Member · Accepted solution]

G. Lakshmipathi Sir,

Whatever Process you have explained it seems like STO process.

But Client uses own product in same Plant (manufacturing plant). So in that case what should I do ?

It's correct that client only wants to capture ED value.

Please explain the process elaborately.

(1) PO Type

(2) Delivery Accounting Entry

(3) Invoice Accounting Entry

[Lakshmipathi · Accepted solution]

Currently clients wants to use their own CEMENT for their own use( like construction of own guest house, building etc.). 

As per excise rules, if any exciseable product is transferred within the same registration, then it can be treated as captive consumption for which, no need of duty adjustments.  On the other hand, if the excise registration is different, then you can follow either MM route or SD route.  If MM route, sending plant will transfer the cement via 351 movement so that it would be "In Transit" if you check in MB5T.  Receiving plant, once they do GRN / MIGO with movement type 101, the corresponding excise entry would get adjusted.  For accounting entries, take the help of your FI consultants.

Alternatively, if you want to follow SD route, then you have to create multiple customer masters which I dont think, is a best practice.  Interact with Business Finance and Excise teams and get their concurrence as to how they want to map this process. Accordingly, you can map but as a consultant, you also have to tell the repercussion on creating master data.

G. Lakshmipathi