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SAP

Country India Version



Back ground of Country India Version (CIN)

First version developed in 1996 in response to need of India customers standards product supplied by the SAP

as add-on from 4.70 it is added in the standard pack confirmation to SAP development standard supported by

the SAP development LAB

Country-Specific Functions:

Most of the country-specific functions for India relate to Financials and Logistics. The main areas are as

follows:

Excise duty and the central value-added tax system (CENVAT)

Withholding tax (also known as tax deducted at source)

Sales tax

Maintenance and printing of statutory excise registers

FI covers following areas

1. Taxes (FI-AP/AR)

2. General Ledger Accounting (FI-GL) 3. Accounts Payable (FI-AP)

4. Accounts Receivable (FI-AR)

5. Asset Accounting (FI-AA)

Note: The official help documentation for Country Version India

is here(http://help.sap.com/saphelp_erp2005/helpdata/en/09/ebf138cdd78a4be10000000a114084/frameset.

htm)

Agenda:

Objective Glossary

Interface between SAP and CIN

Indian localization coverage

Configuration – FI-CIN, MM-CIN, SD-CIN

Process in SAP with CIN with

Procurement

Sales

Finance

Report

Objective:

To enlighten the participants on country version India (cin) and the various requirements which are to be

completed under the Indian statute. How CIN interfaces with sap sd, mm and f i pr ocesses and meets the

report requirements .At the end of the presentation, each participant will have a fair knowledge of the

requirements and inter faces of CIN with sap.

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This country version is designed for use by businesses with operations in India. As well as the generic SAP

System functions, it comprises functions designed for laws and business practices particular to India, and a

country template to help you customize the system according to local requirements.

Most of the country-specific functions for India relate to Financials and Logistics. The main areas are as

follows:

Excise duty and the central value-added tax system (CENVAT)

Withholding tax (also known as tax deducted at source) Sales tax Maintenance and printing of statutory excise registers

All of the menu paths given in this document are based on the India Localization role, with the exception of

functions in withholding tax, whose menu paths are given from the SAP Easy Access menu.

Glossary:

INPUT TAX -Tax that is charged by the vendor. A claim for refund of the deductible portion of input tax can be submitted to the tax authorities

OUTPUT TAX -Tax levied on customers at all Levels of production and trade. Output tax represents a tax liability.

SERVICE TAX :

Tax levied on the customer on Services specified by the gover nment.

DEPOT:

Depot is a plant where the material is stored and sold. There is no manufacturing activity at the de pot. Thedepots when registered with the excise authorities can pass on the Modvat / cenvat benefits to the customer .

EXCISE DUTY (BED):

A quantity-based tax which must be paid when a dutiable material is moved from a duty-free (bonded)location to a duty-paid (un-bonded) location or the customer. Also known as excise tax. The excise duty is

based on the quantity / Value of material moved.

AED

Additional Excise duty is a duty which is calculated over and above the Excise Duty payable on the

material.

SED:

Special Excise Duty is an additional duty levied on certain materials depending on the characteristics of the

material. The statute specifies these materials.

CVD:

Countervailing duty is a levy charged on the imports of materials in lieu of excise duty.



CENVAT

Central Value Added Tax. The tax is levied on the difference between the output and the input value. This is

also referred as MODVAT.

CESS

Cess is a tax imposed for a specific pur pose under different acts with reference to certain goods. Cess is levied

at the time of removal of goods from the factor y.

OCTROI:

Levy payable on the material to the local authorities.

NCCD:

National calamity Contingent Duty. This tax is a special purpose tax levied for prescribed / scheduled

product announced by the Finance ministry of India. This tax is cenvatable.

Purchase TaxThis is a tax levied by some states when the manufacturer received a material from the out side state has to

pay the purchase tax.

Service Tax:

The service provider who has the registration with the Central Excise can collect the tax for the service provided. This is also cenvatable and it can be utilized for payment excise duty or payment of service tax.

VAT:

Government of India introduce the Value Added Tax from April 2005. As the first stage, it is removingvarious sales tax slabs. It is the modif ied version of Local sales tax and it is cenvatable. Education Cess:

Additional tax for the improvement of the regional Education introduced in India union budget in2005.

Higher Secondary Education Cess:

Additional tax for the improvement of the regional Higher Education introduced in India union budget in2007.

ASSESSABLE VALUE:

Denotes the value of goods that you have manufactured in-house at the price as assessed by an authorizedauditor .

SETOFF

A certain percentage of input tax which is refunded by the government to the manufacturer. This refund

does not form part of material cost

CHAPTER ID





TDS :

Tax deducted at source (Withholding tax) is a form of indirect taxation deducted at the b eginning of the payment flow. Generally, an amount is withheld and paid over or reported to the tax authorities on behalf of(as opposed to by) the person subject to tax, the exception being self- withholding tax. If a withholding taxexemption is available, withholding tax is not withheld.

REGISTERS

The registers are the books prescribed having specific format under the statute e.g. RG23A, RG23C, RG23D,

RG1and PLA

RETURNS

The prescribed forms having a specif ied format under the statute e.g.ER-1, 57AE, ANNUAL RETURN FOR

TDS, Quar terly E-FILE.

CIN interference with SAP:

Country version india installation

Copies the following (upto 4.6c) (tcode o035)

Standard india templatesx

Tax procedure (taxinj / taxinn)

Conditions – excise, taxes on sales & purchase, service tax, cvd e tc Tables , function modules , no.range objects, customer exits

Indian localization coverage

Covers the following;

Central/Local Sales tax/ VAT Sales Tax Set off

Sales Tax Set off

Concessional Tax form



Service Tax Input/output Tax

Octroi

Basic/Additional/Special Excise duty/Additional duty of Customs/Cess /Education NCCD/Higher

Education Cess

Maintain the of rate on Vendor Class

Maintain the of rate percentage and Utilization of MOVATMonthly payment

CVD(Imports)

Sub-Contracting

Sub-Contracting Challan

Reconciliation of quantities

Maintaince of 57F4 Register

MoDVAT

Updating of part 1 Register for quantities

Updating of part 11 Register for Values

Updating ofRG23D for depot Printing of Excise Registers

Part1 and part 2 Registers

RG 1 Registers

RT12/ER1 return

PLA Register

Facility for down load

Extended With-holding Tax

Withholding Tax on down payment/Invoice/Provision/Accumulation

Multiple Tax line items in one Invoice

Calculation of alternative (Gross, Net, Offset)

Rounding options

Payment due dates by Business Place

Challan update and Accounting Clearing

Surcharges on withholding Tax

Certificate numbering for different section and Business places

Certificate printing with customizable layout

Annual return for various section of income Tax Act

INDIAN LOCALISATION – IMG



In these steps the Basis team

performs the installation &

activation of Country Version





IMG- ACTIVATE PROCESSES

ACTIVE INDICATOR

FISCAL YEAR UPTO AND INCLUDING WHICH TRANSACTION APPLIES



IMG- ACTIVATE PRODUCTS

Activate Component



IMG- GLOBAL SETTING – COMPANY CODE

ACTIVATE PRODUCT EXTENDED WITHHOLDING TAX



IMG- GLOBAL SETTING – REGISTARTION ID

1. Company code

2. CENVAT Document Type

3. DR / CR Overwrite Indicator

4. Automatic Balance Adjustment Indicator

5. Beginning of Government Fiscal Year

6. Invoice Selection Procedure – LIFO , FIFO

7. Number of Excise Invoice to be selected

8. Days to be considered for Invoice Selection

9. TDS Document Type

10. Excise Utilization Document Type

11. Excise Duty Rounding in Procurement Cycle 12. Excise duty rounding in sales and Distribution

13. Immediate credit for Capital Goods

14. GL Account for CVD

15. Exchange Rate Type

16. Exchange Rate type for Export

17. Changed By

18. Changed On



IMG- GLOBAL SETTING – PLANT

Registration ID

ECC NO

Excise Registration No.

Excise Range

Excise Division

Excise Collectorate

Additional Excise Duty

Indicator

Special Duty Indicator

Indicator CESS Indicator

Number Items In Excise

Invoice

Register Set Description

Partial CENVAT credit

Indicator



IMG- GLOBAL SETTING – EXCISE GROUP

Registration ID

Indicator for Factory /

Depot



IMG- GLOBAL SETTING – SERIES GROUP

Series Group For

creating Number

Range No Utilization Indicator

Immediate

Utilization of

MODVAT



IMG- GLOBAL SETTING – EXCISE DEFAULTS

IMG- GLOBAL SETTING – EXCISE DEFAULTS



IMG- ACCOUNTING – TRANSACTION ACCOUNT

EXCISE TAX INDICATORS

This Identifies the Class

1. Normal

2. SSI



IMG- ACCOUNTING – ASSIGN GL ACCOUNT

Account Names. This account

names are used by the program

To determine the GL account.

The sub-transaction type used for

determining different account

Transaction Account. These are pre defined in the system



What will transaction type do?

CIN uses transaction type as a way of differentiating between the various excise related processes. They are:

GRPO – Goods receipt for purchase order in Plant. Also used in Depot for a PO and material document

EWPO – Excise invoice without purchase order

57FC - Subcontracting Challan

57NR – Reversal and Re-credit for Subcontracting Challan

CAPE- Capital Goods credit accounts

OTHR- Excise Invoice for Other Movements

DLFC- Factory Sale and Stock Transfer via SD

CEIV- Cancellation of Generated Excise Invoice

DIEX- Differential Excise Invoice Credit

MRDY- Excise Duty reversal without reference

MRRD- Excise Duty reversal if material used for non-production

MRWO- Excise Duty Reversal for Write off CasesTR6C - PLA account adjustment through TR6 Challan

UTLZ- is used for determining the accounts when a JV is posted with an option of fortnightly payment

57FC - Challan capture/change 1

57NR non receipt 1

CAPE - Capital goods ip

CEIV - Cancellation of excise invoice 22

DIEX - Differential excise through jv ip

Assign GL accoun

to transaction

type, sub-

transaction type

and account

Name defined in

the earlier step.



DLFC - Goods removal through sales 22

EWPO - Excise invoice without po

GRPO - Excise invoice for goods receipt/po

OTHR - Excise invoice for other movements 10

The Transaction type that are not used : 57CM, 57GR, CAGI, CAGR, GRTR.

IMG- ACCOUNTING – MININIMUM BALANCE

IMG- LOGISTICS – INCOMING EXCISE INVOICE

Maintain Minimum balance for each excise group and account

name. The system will check the balance before utilization.



IMG- LOGISTICS – FIELD SELECTION



IMG- LOGISTICS – PROCESSING MODE

In this transaction

the field

characteristics can

be set. (Input /

Required / Display /

Hide) Also the field

can be Highlighted.



IMG- LOGISTICS – REFERENCE DOCUMENT

IMG- LOGISTICS – REJECTION CODES

In This step set how the system should

reference the data for each transaction

and processing mode.

Set the Active flag for this to work.



IMG- LOGISTICS – MOVEMENT TYPES

In this Step Define the rejection

code for Incoming Invoice.

The Excise on the rejection can be

assigned to MODVAT on hold

instead of MODVAT clearing by

setting the posting indicator





IMG- SALES AND DISTRIBUTION

In this step set the sub-

Contacting attributes

such as :-

1. Sub-contract

period

2. Rate of Excise

Duty

3. Movement

group - Issue

4. Movement

group – Receipt

5. Number Range

ID6. How value to be

determined

7. Output Type

For printing



IMG- ASSIGN BILLING TYPE TO DELIVERY

IMG- EXCISE GRP & SERIES GRP DETERMINATION

In this step assign the Sales and Distribution Deliver type to the Sales and

Distribution Billing type.

Ensure that one entry with blank delivery type is created with Debit note

billing type assigned. This is required to pay supplementary excise duty.



IMG- FORM TYPES

IMG- FORM TYPES

Populate various fields in the table. The

entries in the tables are used to

automatically determine the excise group

and series group and thus the excise

invoice number and type of sale.



IMG- FORM TYPES

IMG- EXTENDED WITHHOLDING TAX



IMG- EWT – BUSINESS PLACE

IMG- EWT – ASSIGN DOCUMENT TYPE

Business place is an entity responsible for

deduction of Tax at source and payment

to the Government on due dates. The

Business place is also responsible for

issuing the certificate and filing of return.

The business place is registered with the

government.



PROCUREMENT PROCESS

REQUIREMENTS AS PER INDIAN STATUTE

1. Calculation of excise duty based on material and chapter id combination

2. Calculation of excise based on class of vendor

3. Calculation of input tax based on interstate transactions

4. Calculation of input tax setoff on incoming material (applicable to factory).

5. Capture of part i and part ii for cenvat.

6. Subcontracting – u/s 57f4 without payment of excise duty

7. Subcontracting – quantity reconciliation & settlement

8. Subcontracting – payment of excise duty for non-receipt of material after specified period.

In this step Accounting

Document type for each

process



PROCUREMENT SCENARIOS

HOW TAXES ARE DETERMINED

1. The chapter id from cin table for the material 2. Excise rate derived from chapter id from cin master

3. In tax procedure 100% of the rate is calculated

4. The tax code is entered in the line item and the jurisdiction of the vendor is accetpted as an input.,

5. The cvd is entered manually in the pricing schema.

PROCUREMENT- LOCAL PURCHASE

IMPORT

MATERIALS

SUB -

CONTRACT

ING

CAPITAL

GOODS

LOCAL

MATERIALS

STOCK

TRANSFER



This also updates the excise header / line item tables.

PROCUREMENT- IMPORT PURCHASE

SAP

CREATE PO

PRICING

GR

IV

Create Excise Invoice for

CVD.

This is entered manually in

Pricing

Update Part I - Qty

Simulate & Post Cenvat.

Update Part II –Val

A/c. Determination




PROCUREMENT – SUB-CONTRACT

SAP

Create P O

Pricing

GR

IV

CIN

Create Excise Invoice for

CVD.

This is entered manually

in Pricing

Update Part I - Qty


Update Part II –

Val A/c. Determination

SAPCIN



Note

Sub-Contracting Cycle

(1) You have a material that can be procured externally, and you have maintained BOM with components. Any

waste generated and received during subcontracting process can be maintained as component with negative

quantity.

(2) You create a subcontracting PO (PO with Item Category L). You can also maintain Purchase Info Recordfor Subcontract category for material and subcontractor.

(3) You make a transfer posting to issue components for SC PO. Material is sent to subcontractor. As material

remains under your ownership, system does not make any value entry. But quantity is shown as "Material

Provided to Vendor"

(4) You receive finished material against SC-PO. You also specify components consumed in manufacturing of

finished goods. Additionally, if you have negative components in BOM, now you'll also receive subcontracting

by-products. There are three events, so three accounting entries are generated:

DR FG Stock/ SC By-Product Stock

CR Change in Stock (FG/ SC By-Product)

(for finished goods received)

DR Subcontracting Charges

CR GR/IR Clg

(For moneys payable to Subcontractor)

DR Consumption (Components)

Create P O

TRF Posing

GR

IV

Create Sub- Contract

Challan w.r.t mat. doc. Print Excise Challan

Update Register

Settle w.r.t. sub-contract

challan.

Consumes the child

material.

Updates Register

Reconciliation and

Completion of Challan



CR Change in Stock (FG/ SC By-Product) 0

(Material provided to Vendor is now charged to expense)

(5) You do the IV for SC Invoice, and the process is complete.

Process of Subcontract in MM

Sub-contract business process:

You want to buy material from the supplier (processed material/ assembled item) , but for some reason (quality

of certain item / price ) you will give some component to vendor .

Vendor shall process the item / use the item provided & supplies the final item.

SAP process:

1. Create the finished goods material code.

2. Maintain the BOM for the material.

3. Create PO with item category as "L" .

4. Issue material to vendor with movement type 541

5. Receive the material against the PO with movement type 101.6. MIRO to account for vendor's invoice for the service charge& material used by him.

Note:: At the Time of GR 543 Mvt is up dated for Raw Material.

Can anybody tell me how a process has to be given to subcontracting?

Suppose, I have 3 operations 1) weaving 2) dyeing 3) cutting & packing

If no 2 process (i.e. Dyeing) has to be given to subcontracting, what process should i follow?

The following process to be followed for subcontracting.

1. Item code (material master) to be created at the stage of before dying.

2. Item code (material master) to be created after Dyeing as subcontracted item.(F30)3. Bill of material to be created for the material (2) calling for material (1)

4. Info record and source list to be created for material (2) with the corresponding vendor

5. PO to be released for material (2)

6. Along with PO the material (1) to be issued to vendor

7. on receipt of material when GR is made the stock with vendor will get updated.

PROCUREMENT – CAPITAL GOODS

SAP CIN




PROCUREMENT – STOCK TRANSFER

Note

For Stock transfer between two storage location use MB1B with movement type 311.

For stock transport order between two plants of the same company code with one step

1) Create a purchase order - ME21N

2) Create a outbound delivery - VL10D

3) Create a Post Goods Issue - VL02N

Creating P O

Pricin

GR

IV

Excise Rate Determination

Based on Material / Chapter

ID and Vendor Class


Update Part I -Qty

Update Part II – Val

A/c. Determination

50% - current year 50% -

next year.

SAP

Create Stock transfer

order

GR WRT delivery

CIN

Capture Excise Details in

RG23D Folio No. is created

for each material received.

Update Registers / Tables



Further Note

Whenever you need to transfer the materials from one plant to another plant belonging to one company or belonging to two

company code stock transfer order is raised by the delivering company.

STO:

Transfer of goods from one location to another location, it may be between plants within the same company code or in

different company code's plants. within the company code, bet plants, receiving plant will raise the STO in

Supplying/issuing plant-ME21n, Supplying plant will deliver the goods to receiving plants , then we need to pick n post the

Goods Issue-VL02n, now when we can observe that the STO qty will be added into receiving plant and reduced in

Delivering plant.

To do this, we need do prior customization in SPRO-IMG,-material should be created in both plants( receiving &

Supplying)

-maintain the stock only in supplying plant

-create a dummy customer in supplying plant's sales area(if u have one sales area, create in tat comp code n sales area)

-Assign this customer number to receiving plant's details along with the sales area,

-Assign the STO doc type (UB) to Supplying plant, along with checking rule-Assign the Del type (NL/NLCC) to Supplying n receiving plant.

Create Stock Transport Order

Post goods issue for stock transport order

Post goods receipt for stock transport order

Note: Quantity "on the road" can be monitored

Delivery costs can be entered in the stock transport order

Internal Procurement (Cross-Company Stock Transfer):

You post a stock transfer from company code to company code the same way as you post a stock transfer from plant to

plant, except that both plants belong to different company codes.

During the stock transfer, two accounting documents are created in addition to the material document:

-An accounting document for the removal from storage at the issuing company code

-An accounting document for the placement into storage at the receiving company code

The stock posting is offset against a company code clearing account.

To display the value of the cross-company-code stock in transit with a report, choose Environment à Stock à Stock in

transit Cc.

The following functions are provided to support the cross company stock transfer:

Create sales order to customer

Run single-level MRP

Creating a purchase order

Creating delivery



Picking and post goods issue

Posting goods receipt

Create inter-company billing document

Invoice receipt

Create delivery, picking and post goods issue to customer

Billing

SALES PROCESS

REQUIREMENTS AS PER INDIAN STATUTE

1. Calculation of excise duty based on material and chapter id combination

2. Calculation of excise based on concessional forms.

3. Calculation of output tax based on interstate transactions

4. maintenance & printing of excise / st. details of customers on invoices

5. Usage of pre-printed invoice no.6. Excise invoice no. should start with no.1 for every government fiscal year in depot.

7. Maintenance of rg23d register in depots

8. Reproduction of all excise details on depot invoices wrt source document.

9. Identification of depot sales / first stage / second stage dealers in depot

10. Maintaining separate folio no. for all incoming material in depot .

11. Maintaining entry no. for each folio for outgoing material in depot.

12. Levy of service tax on all services rendered from factory / depot.

13. Payment of cess on certain category of materials (if applicable).

14. Maintaining of excise rules

SALES SCENARIOS

Taxes are determined by the system

Factory Sales

Stock Transfer

Depot Sales



1. The chapter id from cin table for the material

2. Excise rate derived from chapter id from cin master

3. In tax procedure 100% of the rate is calculated

4. The jurisdiction is determined based region maintained in customer master and plant,

5. If the region is same then state level taxes are applicable else federal taxes will be applicable . this

is determined by the routines in tax procedures.

6. The taxes on sales and purchases are determined based on the tax codes

SALES SCENARIOS – FACTORY SALES


SAP

Create S O

Delivery

Post goods Issued

Billing

CIN

Excise Rate

Determination

Based on Material /

Chapter Id / Form

type. ST based on

Jurisdiction and

Tax Codes

Excise Inv. WRT

SAP Billing Doc.

Selection of Rules

Update No. Range

Update Tables

A/c Determination



SALES SCENARIOS – STOCK TRANSFER

Sales scenarios – depot sales

SAP

Delivery w.r.t sto

Created in

Procurement

Post goods Issued

Billing

CIN

Excise Inv. WRT

SAP Billing Doc.

Selection of Rules

Update No. Range

Update Tables

A/c Determination for

EXCISE

SAP

Create S O

Delivery

Post goods issued

Billing

CIN

Excise Rate Determination

Based on Material / ChapterId.

Excise Inv. WRT SAP Material Doc.

Select Excise Inv. From RG23D register

Selection of Rules Update No. Range

Update Tables



REQUIREMENT OF FINANCE

Withholding tax

• Accumulation of tax base amount

• Certificate numbering based on business place and it section

• Annual return for each section

• Payment of withhoding tax

• Calculation of surcharge

• Certificate printing showing tax rate inclusive of surcharge

• Payment by due date

Excise duty

• Fortnightly payment

PROCESS OF WITHHOLDING TAX

TDS a ment

Request for down payment

Payment of request

Calculate of TDS

Accounting

TDS on Invoice

Calculate of TDS

Adj for down payment

Payment of TDS

Up date Challan

PRT Certificate

Annual Returns



Process for payment of excise

STATUTORY REGISTERS / REPORTS

RG23A PART I REGISTER

RG23A PART II REGISTER

RG23C PART I REGISTER

RG23C PART II REGISTER

RG1 REPORT

RT12 REPORT

57F REGISTER

RG23D REGISTER

TDS CERTIFICATES REPORT

TDS ANNUAL RETURN REPORT

IMPORTANT CIN TABLES AND FUNCTION MODULES

Selection of date

Utilization

Selection of Registers

RG23A, RG23C,PLA

Payment

Accounting



TABLES :- All CIN tables start with J_1I and J_2I. There are 129 tables.

J_1IEXCHDR (Header data of excise doc.)

J_1IEXCDTL (Line item data of excise doc.)

J_2IRULES (Table for maintenance of excise rules )

FUNCTION MODULES :- All CIN function modules start with J_1I . There are 151 Function Modules.

J_1I_DETERMINE_EXCISE_YEAR Determines the excise year

J_1I2_FI_POST_MODVAT_AMOUNT FI posting for a given modvat amt and GR

J_1IEWT_CHALLAN_UPDATE Internal Challan Number Updates. EWT-India.

FISCAL YEAR

All the statutory reports and registers have to be maintained as per the Government Fiscal Year. The

Government Fiscal year starts from 1st of April and ends on 31st of March of the subsequent year. The Income

Tax Depreciation has to be calculated on the basis of the Government Fiscal Year basis.

NUMBER RANGES

Number Range Objects for CIN are different from the standard SAP . There are 21 number range objects.

J_1ICERT: No range for Certificate Printing-EWT India.

J_1IEXCINV: Excise invoice number

The year dependent no.ranges will have to be maintained for all the objects. Number Range in case of

withholding tax certificate should be maintained for a business place and withholding tax section. In case of

Depots the excise invoice number range should start with 1 for every government fiscal year.

How number range are defined in cin



Tax Procedures

• SAP provides following std. tax procedure for country India

• Formula based tax procedure TAXINJ

• Condition based tax procedure TAXINN

Formula based procedure – TAXINJ VS Condition based tax procedure TAXINN

Definition:

A method that the system uses of determining excise duty in India. This method requires you to create conditionrecords for each combination of vendor or customer and material (and possibly other conditions).When you createa purchasing document, the system calls the tax procedure assigned to India. The tax procedure finds all of thecondition records that you have created for that combination of vendor and material.

Formula-based excise deter mination A method that the system uses of determining excise duty in India.This method was used in the Country Version India Add-On and requires you to maintain additional data in theExcise Rate Maintenance transaction, J1ID.When you create a purchasing document, the system calls the tax

procedure assigned to India. Each of the excise duties in the tax procedure has its own condition types, and each

http://localhost/var/www/DOCUME~1/KUMAR~1.ARM/Desktop/CIN-Settings/taxinj.HTM



http://localhost/var/www/DOCUME~1/KUMAR~1.ARM/Desktop/CIN-Settings/TAXINN.HTM











condition type is assigned to a formula. This formula instructs the system to calculate the excise duty using the datathat you have maintained in the Excise Rate Maintenance transaction.

Excise Registers

Excise Laws require you to maintain a number of registers in a specified formatrelating to excise duty. They have to be printed out monthly and shown to the

authorities in the event of an audit. The SAP captures this requirement.

Type of Registers:

RG23A PART I

RG23A PART II

RG23C PART I

RG23C PART II

RG I

RG23D

RG23A: Raw Material

The entries pertaining to quantity will go into RG 23 Part I and that of duty will go into Part II

in the appropriate duty column. i.e. Basic Excise, SED, Additional duty, etc

RG23C: Capital Goods

RG23CI-Part I entry: Excise stock entry at the time of GR (only quantity)

RG23CII-Part II entry: Credit entry of Capital goods (only value)

RG-I : Finished Goods (only Quantity)

The finished goods (manufactured, sub-contracted or gained) and sales or stock transfer are

entered in the RG I Register

Register RG I is updated after creation of an excise invoice while dispatching the goods from

the factory premises with reference a commercial invoice or a pro-forma invoice

RG23D: Depot (this indicates both the Quantity and the amount)

CIN – Master



Maintain Chapter ID‟s

Excise Duty Indicators

Determination of Excise Duty

CIN Details can also be maintained in Material Master, Vendor Master & Customer Master.

CIN data pupation directly possible from

• Material master

• Vendor master

• Customer master

What is CENVAT

• In India, excise duty is a tax on the manufacture of goods that is levied when goods leave the place ofmanufacture. Manufacturers can set off the duty paid on input materials against their output duty, a

procedure known as CENTRAL VALUE ADDED TAX (CENVAT)

• Excise duty is a duty, levied on production or manufacture of goods. It is a tax levied on manufacture of

goods and the liability to pay excise duty arises immediately on manufacture or production of goods

• Once manufacture of goods is complete, excise duty is payable, whether the goods are sold or self-

consumed. Excise duty does not depend on the end use of the goods.

• Excise Duty is a tax on manufacture of goods but for the sake of administrative convenience, it is

collected only on removable of goods from the factory.

• CENVAT Credit

WHEN AND HOW MUCH CREDIT CAN BE TAKEN

• The Cenvat Credit in respect of inputs may be taken immediately on receipt of the inputs.

• The Cenvat credit in respect of Capital Goods received in a factory at any point of time in a given

financial year shall be taken only for an amount not exceeding fifty percent of the duty paid on such

capital goods in the same financial year and the balance of Cenvat Credit may be taken in any

subsequent financial year.

• The Cenvat credit shall be allowed even if any inputs or capital goods as such or after being partially

processed are sent to a job worker for further processing, testing, repair etc. and it is established from

the records that the goods are received back in the factory within180 days of their being sent to a job

worker.

• Where any inputs are used in the final products which are cleared for export, the Cenvat Credit in

respect of the inputs so used shall be allowed to be utilised towards payment of duty on any final



product cleared for home consumption and where for any reason such adjustment is not possible, the

manufacture shall be allowed refund of such amount.

CENVAT Utilization

Payment to be made to Excise Department for the Self – Removals for the last month. Utilization to be doneagainst the last month‟s incoming excise duties and CVD. CENVAT utilization to be done before the 5th of next

month.

SAP Transactions

Activity SAP Transactions

Register Updates J1I5

RG23 A (Part I & II and RG I) Register Extraction J2I5

Register Printing J2I6

Utilization J2IU

Factory Process – Materials

In the Process of Manufacturing the Factory uses two kinds of materials.

Input Material:

Is defined as the one which loses its own identity in the finished product.

Capital Goods:

Is defined as the one which does NOT lose its‟ own identity in the finished goods.

Factory Process- Registers

The Factory uses the following Excise Registers

RG23 A - Part I (Captures the material A/c)

RG23 A - Part II ( Captures the Duty A/c)

RG23 C - (Captures Capital Goods Duty A/c)

RG 1 - Is a finished Goods Register




RG23 A – Part I & Part II

Material is received in the factory as “for Quality inspection” or “for Direct Input”.

Material after “Quality Inspection” or when used as “Direct Input” will go into the RG 23 A Registers.

The entries pertaining to quantity will go into RG 23 Part I and that of duty will go into Part II in the

appropriate duty column. i.e. Basic Excise, SED, Additional duty, etc.


RG23 C

Purchase of Capital Goods by the factory for manufacturing purpose are only passed in RG23 C

Register.

The excise law permits claiming 50% MODVAT Credit in the current year and 50% in the next year

for Capital Goods.

RG I

The finished goods(manufactured, sub-contracted or gained) and sales or stock transfer are entered in

the RG I Register.

Register RG I is updated after creation of an excise invoice while dispatching the goods from the

factory premises with reference a commercial invoice or a pro-forma invoice.

Depot Process:

The RG 23 D register is used to update the excise entries in case of Exciseable Depots.

The Excise duty is payable when the goods are sent from the factory. However, it is not levied again

when the goods are sent from the DEPOT.

However, while taking sale from the DEPOT and if price escalations happen, then the extra excise is

paid using a A certificate. These details are entered in the RG23 D register and excise recovered from

the customer.

Transactions can happen through two scenarios:

Scenario1: Depot receives goods from the company‟s factory through stock transfer.

Scenario 2: Depot procures goods directly from external sources.

For Doing Goods Receipt:



Scenario 1: Stock Transfer

Step1: Do GR (Transaction code:MB01)

Step 2: Excise Invoice Capture at Depot (Transaction Code: J1IG)

Scenario 2:

Step 1: Do GR (Transaction Code: MIGO)

Step 2: Excise Invoice Capture at Depot (Transaction Code: J1IG)

India Localization: Sales & Distribution

Features: It covers the following

Sales from Factories

Sales from Depots

Stock Transfer

Export Sales

Export Process

In the process of Exports under bond duty is not payable and the goods move out from the factory against

an ARE1.

However, goods not under bond move out of the factory by paying the duty and refund is separately

claimed on showing proof of export I.e. shipping bill.

In case of Deemed Exports, the same procedure is followed as in exports, However, the form used is ARE3.

Determination of ED Rate in Sales and Distribution

Settings for the same done through configuration & Master Data

Material: Material Chapter ID

Customer Excise Details: Excise Indicator for Customer

Plant Excise Details: Excise Indicator for Plant

Excise Indicator Customer + Excise Indicator Plant = Excise Indicator Final

Material Chapter ID + Excise Indicator Final = Excise Tax Rate



FI Entries related to Excise in SD

During the passing of Billing document to Accounting: (VF02, Release to

Accounting)

Dr Customer Rs. 125/-

Cr Sale Rs. 100/-

Cr Excise Duty Recoverable Rs. 16/-

Cr Taxes Rs.9/-

During creation of Excise Invoice: (J1IIN)

Dr Excise Duty Recoverable Rs.16/-

Cr Excise Duty Payable Rs.16/-

During Monthly Utilization: (J2IU)

Dr Excise Duty Payable Rs. 16/-

Cr CENVAT Clearing Rs.16/-

Exemption Forms

Some customers may be liable to excise duty at reduced rates or exempt from it altogether (for

example, customers abroad). Such businesses must provide you with a copy of their exemption forms

in order to claim their exemption.

If you make a sale to a customer that is in possession of an exemption form, you have to record the

form number in the sales order. The system then automatically applies the appropriate rate of excise

duty.

When you create the sales order, enter the form, using the customer tax classification fields. Based

on the customer tax classification status, you can use different excise rates for a sale transaction.

If the form has not been submitted by the time you create the pro forma excise invoice, the excise

value will be recalculated at the normal rate.



Export-Oriented Units (EOU)

Any sales that you make to export-oriented units (EOUs) require special treatment by the SAP

System. You have maintained a zero-rate excise duty indicator for customers that qualify as 100%

EOUs.

When you come to create the excise invoice, the excise value is zero in the pro forma excise invoice

document. No excise duty is debited to the CENVAT account, and so no accounting entries are

generated. However, the sale is marked as a deemed export, and the system generates an outgoing

excise invoice.

Even though the excise duty is zero, when you print the excise invoice, the system calculates the duty

for the purposes of printing.

Exports under Bond

One of the ways of exporting goods without paying basic excise duty is to obtain an excise bond from

the excise authorities and then fill out an ARE-1 document to go with every export.

Excise Bond

A document that effectively licenses a manufacturing plant to remove goods from its premises without

paying basic excise duty, on condition that the goods are then exported.

An excise bond covers a fixed amount of excise duty. The excise duty of the goods exported under

bond cannot exceed the bond value.

In the system, the term "excise bond" also covers letters of undertaking, and all of the excise bond functions

apply equally to letters of undertaking, unless stated otherwise.

When you obtain a bond from the excise department, enter it in the system. The system numbers

each bond automatically.

Exports under Claim for Rebate

If you have not obtained an excise bond, you must pay any excise duty liable when removing goods from yourpremises for export. However, you can claim a rebate for the excise duty once you have completed the export if

you fill out an ARE-1 to go with the export .

Deemed Exports

You can ship deemed exports to any customers in possession of a deemed export license without

paying any basic excise duty, but only if the goods are accompanied by an ARE-3 document.

http://help.sap.com/saphelp_erp2005vp/helpdata/en/15/ad76920fca0c4398bc80a902e6f127/content.htm

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Accounting entry in procurement

For Domestic Procurement of Raw Material

During GR

Material Stock Dr.

GR/IR clearing Cr.During Excise Invoice Credit

Cenvat Account Dr.

Cenvat Clearing Cr.

During Invoice Verification

Cenvat Clearing Dr.

GR/IR Clearing Dr.

Vendor Payable Cr.

For Domestic procurement of Capital Goods

During GR

Material Stock Dr.

GR/IR clearing Cr.

During Excise Invoice Credit

Cenvat Account Dr. (50%)

Cenvat On-hold Dr. (50%)

Cenvat Clearing Cr.


Cenvat Clearing Dr.GR/IR Clearing Dr.

Vendor Payable Cr

Subsequent of Capital Goods

Cenvat Account Dr. (50%)

Cenvat On-hold Cr. (50%)

For Import Procurement of Raw Material

During Customs Duty Clearing invoice

Custom Clearing Dr.

Custom Payable Cr.



During GR

Material Stock Dr.

GR/IR clearing Cr.

During Excise Invoice Credit

Cenvat Account Dr.

Custom Clearing Cr.


GR/IR Clearing Dr.

Vendor Payable Cr.

For Excise Duty Credit of Raw Material without PO

Cenvat Account Dr.

Cenvat Clearing Cr.

For Excise Duty Reversal through Excise JV

Cenvat Clearing Dr.

Cenvat Account Cr.

During Excise Invoice Creation

Cenvat Suspense Account Dr.

Cenvat payable Cr.

For TR6C Challan

PLA Account Dr.

PLA on hold Account Cr.

During Fortnightly Utilization

Cenvat payable Dr.

Cenvat Account Cr.

PLA Account Cr.



For Subcontracting Challan Reversal

Cenvat Reversal Dr.

Cenvat Account Cr.

For Subcontracting Challan RecreditCenvat Account Dr.

Cenvat Reversal Cr.

Accounting entry in SD

For Factory Sale

During Billing Document

Customer Account Dr.

Sales Account Cr.

Cenvat Suspense Account Cr.



Cenvat payable Cr.

For TR6C Challan

PLA Account Dr.


During Fortnightly UtilizationCenvat payable Dr.

Cenvat Account Cr.

PLA Account Cr.

For Stock Transfer through SD

No Accounting entries for Performa Billing Document



Cenvat payable Cr.

For TR6C Challan

PLA Account Dr.




During Fortnightly Utilization

Cenvat payable Dr.

Cenvat Account Cr.

PLA Account Cr.

Note: Cenvat Suspense Account should be cleared appropriately using FI JV‟s.

Maintenance of Excise Master Data

When you execute a business transaction involving materials that are subject to excise duty, the system

automatically calculates the duty for you.

You maintain the following types of data:

Plant master data

You assign each of your plants an excise duty indicator. You can use the same indicator for all the plants with

the same excise status from a legal point of view, such as all those that are in an exempt zone.

Excise Indicator for Plant

On this screen, you enter your plants' tax registration numbers, which are used for various forms of

correspondence and reports:

Central sales tax (CST) number Local sales tax (LST) registration number Permanent account number (PAN)

Excise Indicator for Plant and Vendor

On this screen, you define the final excise duty indicator

Excise Indicator for Plant and Customer

On this screen, you define the final excise duty indicator

Documents

Sap Cin Docs