Excise Duty

After service tax and the service tax process, next, we’ll see what is an excise duty in SAP finance. Now before moving ahead with the excise duty, let us see the path and the transaction code used for excise duty. So here the transaction code is J1ILN for excise duty, and this is the SAP menu path. Now here it is showing all the SAP menu paths, which will we’ll be using under excise duty. So here we have the detailed description of all those master data under in direct taxes.

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Then we have something called procurement, which have excise invoice details. Then we have subcontract details, that is subcontracting challans and reports. After that, we have something called as sales and outbound movements, under which we have excise invoice for sales order for report and for other movements.

Then we have exports under excise regulations where it has exports, individual processing, and deemed reports. Then under deemed reports, we have central processing and individual processing, and then we have something called as excess general vouchers, form tracking, and registers, and then we have assets accounting.

So this is the SAP menu path for excise duty. 

Now first, we’ll see how to maintain an excise master data. So here for maintaining an excise master data, we’ll use the transaction code J1ID This is the SAP menu path. Under master data, we’ll find excise rate maintenance transaction code, that is J1ID.

So once we enter this transaction code, we’ll get this excise rate maintenance screen where we have to select the radio button. Now here, first for master data, we’ll have radio button as chapter ID, material and chapter ID combination, then material and assessable value and send with determination. Then if we need to meet an excise status, then we’ll have the radio buttons as vendor excise details, customer excise details, SSI rates, excise indicator for plant, excise indicator for plant and vendors, and excise indicator for plant and customer. And if we are maintaining excise rates, then we have the transaction codes as radio buttons, excise tax rate, CESS rates, exceptional mass material excise rates, sales tax, set of percentages, and quantity based on AED, NCCD, and SED. So these all are related to excise rate maintenance. So here we have to maintain the master data. So here  we can maintain vendor and customer excise details. Then we’ll maintain item, tariff, heading, and excise rates. So here we can maintain different details related to an excise rate.

Next, after maintaining an excise master data, next, we’ll see what is an excise general voucher. So for that, we’ll have to use a transaction code J1IH Now here, this is the SAP menu path for excise journal voucher.

Now we have many types of excise journal voucher in the system. They can be material write off, material non production, additional excise, other adjustments, then TR6 challan, and we have cancelled excise invoice. So we have different types of excise journal voucher under excise journal voucher J1IH. So we’ll click on this J1IH transaction code. So there we’ll get a create screen for journal voucher.

Now after excise journal voucher and master data, we’ll see how to make adjustments while posting for scrap, that is material write off. So that is our first part of journal voucher. So the first we’ll say about material write off, that is excise journal voucher type. Now here we’ll use a transaction code MB1A for making the adjustments. Now here we have to follow some process for doing a posting for material write off that is a scrap material. Now what is the use of this? We can follow this procedure if we have scrapped a material and want to reverse the excise duty debited to our CENVAT account. So if a material has been scrapped and we want to reverse the excise duty that is debited to the account, then we follow the process of making an adjustments to the scrap.

Now the process would be we’ll go to an SAP menu path where we’ll choose indirect taxes, then we’ll go to excise journal voucher. There, we’ll click on create button for material write off. Now after that, we’ll get this particular screen that is create excise journal voucher. 

This is the initial screen for material doc for write off, that is for scrap. So here we’ll provide the document number, the document year, company code, and the plant details, and we have something called as excise group. Now here we’ll have some radio buttons that is for MODVAT account selection. That is we have  RG23A,  RG is to register, then RG23C, PLA, and  fortnightly payment. So here we’ll select the account selection, and then on the base of that particular account selection, we’ll get a screen where it will give the details for that particular document.

So here we have the material numbers and the material description that is related to that particular account. So this is how we create an excise journal voucher. So this is something called quantities and BED values and CESS values. So this is related to the finance, which we’ll cover under our next session.

After this, once we maintain those entries, we’ll have to click on the determine GL accounts tab under which we’ll get a screen   where we have to maintain the GL account determination.

So this is the GL account determination screen, which we have maintained, and we have maintained the amount for that. Then we’ll click on the continue button. Now after that, maintaining these settings, the second step was we’ll have to enter the data as required. So we’ll enter the document number, and we’ll enter the number of the document that used to be scrapped for that material. So we have maintained those settings, then we have choose the continue button. So the system displays the information for the material document. After that, we have to adjust the posting date as necessary. Then we’ll have to adjust the excise duty for each line item, either manually or by assigning the line item to an excise invoice. Then finally, we have maintained the GL accounts to be posted. Then we have saved the adjustment posting. So after maintaining all those settings, once we click on the save button, we’ll get a message stating that that excise general voucher was successfully created. So this is how we do the posting for a scrap. So this is the general ledger view for that particular document with the line items which we have created and maintained for that particular document.

Next, after making an adjustments for scrap material, next tab we’ll see making adjustment postings for materials which are not used in production, which is the second type of excise journal voucher. Now here, the use of this process is if we have not used a material in the production process and want to reverse the excise duty debited to our account, then we make adjustment posting for materials which are not used in production by following this path. So here, the SAP menu path is indirect taxes, then Excise general voucher, that is after that, we’ll have to click on the create button and material on production. Now here, we’ll enter the data like document number and the material document details that adjustments posting is referred to, then we’ll have to choose the continue button. After that, we’ll adjust the posting date as necessary. Then we’ll adjust the excise duty for each line item either manually or by assigning the line items to the excise invoice. Then we’ll specify the GL account details to be posted. And finally, we’ll save the adjustment posting. So the process is similar to that of created for the posting to a scrap material.