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Mr. Lakshmanan
Member FI Team
Implementation at
British Council
Terminology used

 Excise Group – Each plant is referred to as Excise

group which facilitate creation of Excise Registers for
each Excise Group.
 Series Group – for differentiating the type of
transaction being processed like Domestic Sales,
Exports and Deemed Export Sales.
 CESS is a levy as a percentage on the Excise duty (not
on the assessable value)
 Counter Veiling Duty
 Cenvat
 RG – I – for recording inputs and Finished products,
which contains details of Opening Stock, Production
received during the period, Value at the given point of
time, Tax payable at the given point time etc.
 RG23A – called Cenvat Register for Inputs
 RG23C – called Cenvat Register for Capital Goods
 PLA Register – called Personal Ledger Account
 Capital Goods

Cenvat Can be availed on Capital Goods

50% in the Financial Year in which the goods are procured
50% in the subsequent Financial Year

Normal Goods

Purchases 100.00
Input Tax 16.00

Sales 200.00
Output Tax 32.00
Net Tax Payable 16.00

ECC No. Excise Control Code No.

Consist of PAN No + XXM / XXD + Plant Number

Here M is for Manufacturer
D is for Dealer
Each plant will have a separate ECC No.
Each Plant is treated as a separate entity for the Excise purpose

When there is a transfer of Excisable Goods from one Plant to other Plant
with in the same company must raise an excise invoice for removal of
excisable goods, and actually speaking there will be no monitory outflow of
Excise duty to the government in this case. Only the plant which is sending
the goods is expenging the credit to the receiving plant.

Domestic Sales – Sales with in the country like Plant to plant Transfers,
Sales to customers with in the geographic location of India. Domestic Sales
is the combination of Series Group and Excise Group. For Domestic Sales
we have to Expenge the Excise Duty

Export Sales – All the exports are duty exempted.

Deemed Export : Here we have to pay the Excise duty on the sales made,
which will be reimbursed by the department after the commitment with the
customer is fulfilled, after completion of some formalities with the
Government of India.

 Supplies to PSUs’ for Specific Purposes

 To make local manufacturer in line with the importer

There are only three percentages of Excise duties at present like 8%, 16%
and 24%, AED is not levied at present.

SED : Special Excise Duty

CVD : In addition to the Customs duty we have to pay CVD to the customs
in addition to customs duty on the imports of the goods.
Imports 100
CVD 20
Excise Duty 19
Cost 139
The importer can execute a bond for the CVD to the customs department /
excise department making a statement that the Imports are meant for Export
to the customer and can give a BG for the same, which will be given back by
the department after the Export is executed. The time period for availing this
is six months by the end of which the importer must export the goods or else
he has to pay the CVD along with interest.

It is an Excise duty paid on the Imports of the Goods.

Cenvat : Central Excise Value Added Tax.

RG23A – Register for Inputs

RG23C – Register for Inputs of Capital Goods

SAP Terminology:
In SAP there are some intermediary accounts to which values
are automatically posted and get nullified after some

Cenvat Clearing Account: Offsetting Account for availment of Cenvat Credit

on Inputs and Capital Goods.

T.Code J1IEX – for availing the cenvat credit. We will be entering the
internal excise invoice we have created basing on the PO – Goods receipt –
Invoice – Eligible Excise.

Here there will be two transactions

Capturing the Excise Invoice
Posting the Excise Invoice

Entry posted is RG23A A/c Dr

Cenvat Clearing A/c Cr
This Cenvat Clearing Account is just like GR/IR Account that will be
knocked at the time of Invoice Verification in T.Code MIRO.

Cenvat on Hold Account : To account the Cenvat Credit Available on the

Capital Goods is 50% in the current year and balance in the subsequent
years. This is an account grouped under the Current Assets.
At the time of posting of the excise invoice

RG23C A/c DR 50%

Cenvat on Hold A/c DR 50%
Cenvat Clearing A/c Cr 100%

Posting to the Excise Registers should be done automatically only. No

manual entries shall be allowed.

T.Code J1IH for availing the balance credit available on the capital
goods, for the differential excise, if the capital goods are transferred to
another plant, or returned to the vendor.

Entry generated will be

RG23A A/c Dr 50%
Cenvat Clearing Cr 50%
We must post another entry to knock off the Cenvat on Hold account.
Cenvat Clearing Dr
Cenvat on Hold Cr.

Excise duty payable : to collect the excise duty payable on the Sale, Transfer

Cenvat Suspense A/c : to collect the amount of duty from the customer. This
is same like the cenvat clearing account.

When a sales Excise invoice is raised

Cenvat Suspense A/c Dr with the excise duty payable
Excise Duty Payable A/c Cr with the excise duty payable

When a commercial invoice is raised

S.Drs A/c Dr
Sales A/c Cr
Cenvat Suspense A/c Cr

This entry will nullify the entry passed during the Excise Invoice.

Assessable Values : is basically the sales price to the customer on which we

have to calculate the Excise duty, includes any thing charged as a percentage
on the sale price to the customer.

Ex: Sale Price 100.00

Freight 5% on SP 5.00
Assessable value 105.00

Excise duty @ 16% 17.00

Deemed Exports: Entries

Creation of Excise Invoice

Cenvat Suspense A/c

To ED Payable
Cenvat Suspense 1 A/c Dr
To Cenvat Suspense A/c

T.Code J2IUN – which is plant specific, On monthly basis we have to

generate entries for payment.

ED Payable Dr 100
RG 23 A Cr 50
RG 23 C Cr 30
PLA Cr 20

Chapter ID – Tariff rates for your Inputs.

Every material is treated as numbers in Excise Department.
Material declared as excisable is having a chapter id, which is
8 digits.
Chapter ID – 84818099
84 Main classification
81 Sub-classification under 84
80 Sub-classification under 81 and so on

Material / Chapter ID - all the material shall be created for each plant
according to their chapter ids, separately, from where the excise duty is
captured by the system.

Excise Indicators : Excise indicators used to identify the tax levy by a

particular vendor.

Like Tax Indicator 1 - 50%

2 - 60%
3 - 75%
4 - 80%
5 - 100%

Like wise there will be indicators for customers also.

Export under Bond / Rebate / Letter of undertaking:

Depending on the turnover of the industry the client will execute a

bond with the Excise department for a specified amount undertaking that he
will be exporting the specified amount with in a specified period and make
available the export documents to the Excise department failing which he
will pay the Excise duty along with the interest. In this he has to maintain
register which is called a running bond register will display the balance
available to him at any give point of time.

Form ARE1 (6 copies) in addition to the excise invoice that will accompany
the material till it reaches the port.

Original and duplicate to the port (Stamping on the back will be done and
sending them back to the manufacturer to be submitted to the excise
department as a proof of export, with in six months from the date of export)
Third and fourth to the excise department (one for retaining at their range
and other to be sent to their division)
Fifth copy is for duty entitlement pass book scheme benefit.
Sixth copy is for the record of the Manufacturer.
After verifying the submitted copy with the fourth copy the department will
endorse that the export is taken place as a proof of export. The manufacturer
can take credit of duty in the running bond register.
Particulars Dr Cr Balance
Bond value 10,00,000 – 00
ARE1 NO. 1 1,00,000 – 00
Balance 9,00,000 – 00
Proof of Export 1,00,000 – 00 (admitted by central Excise)
Balance 10,00,000 – 00

This is called Running Bond Register.

Letter of Undertaking: Valid is for one year and shall be renewed on

completion of time.
No need to execute a bond.
No need to maintain Running bond register.
Annexure 19 along with the returns to the department on monthly basis
List of Exports
Proof of exports submitted with in six months
Proof not submitted for which tax is payable

We must update the letter of undertaking details in the system to enable the
system for generation of ARE1 forms. The details of the letter of
undertaking are mandatory for generation of ARE1 as some values are
required to be filled in the form.

Rebate :

When the manufacturer is local inputs and majority of his finished products
is going to be exported the cenvat credit will be getting accumulated and he
cannot utilize the cenvat credit. In this case he can opt for debiting the RG23
with the export and submit the details of such debits made and submit the
proof of export ARE1 to the department and can get the refund of the excise
duty paid.

Another scenario is to get the refund if he is sure that the material purchased
is certainly used for manufacturing the goods that are to be exported.

Usually it will be 100% of the exports made by the manufacturer.

T.Code : J1IH
Export Formalities:

Export formalities are nothing but the proof of exports made by the
manufacturer. Available from Version 4.7.

T.Code J1ILN – India Localisation Menu

Part I Registers for Quantity updations

Part II registers for Value updations.

Transactions at CIN:

Steps in Configuration of CIN:

Customizing the CIN.

Maintaining the Excise Registration Particulars.

The following screen will be presented where you have to provide your
registration details. These details are required for printing in the Excise
Over view of the registrations held by one company
Same Path go to Company Code Settings

Document type is must for posting the entry.

Debit Account override : for interchanging the GL Accounts at the time of
posting the amounts to the GL accounts.
Auto adjustment indicator : for J1IH transaction enabling the screens to the
Imm. Credit on Capital goods : enabling to post immediately the 50% cenvat
credit on the capital goods.

First month : what is the first moth for the Fiscal Year Variant.

Exc. Selling days. : Normally to say that when you will be making the sale

No. of Exc. Invoice Selection : This is for your sales. You can club a number
of delivery notes of different dates and raise the invoice against the same
customer. This enables to create only one invoice for multiple delivery notes.
Entry in FI will be posted only at the time of creating the invoice.
El. Sel. Proc : is the selling process to create invoices for delivery notes
pending for raising the invoice. If you give values the system gives
information when there are leftovers while creating the invoices.

Exchange rates:
Normally customs department will be providing monthly exchange rate to be
maintained for the exports and imports during the coming month which is
maintained in the master records (T.Code OB08).

CVD Account : For imports we have to pay CVD on which we will be

eligible for credit on the amounts paid to the department, for this purpose we
have to maintain a separate GL account.

While creating a excise invoice there will be one small check box mentioned
CVD if you click that box the entries will be made in the CVD account.

In the next step we will attach each of the plants to the excise registers.

In the same path go to “Maintain Plant Settings”

Next you have to maintain excise group which is a replica of your plant
where we will attach the plant to the excise group.
Default Challan Qty in GR : If we select this box all the details relating to
the material, chapter, plant etc will be populated automatically from the GR
while creating the Excise Invoice in T.Code J1IEX.

Create and Post in Single Step : If you enable this each and every invoice
will be updated in the RG23A Register

Part I Posting : If we tick this, the moment we create the Excise Invoice the
Excise record entry will be posted with the quantities in the Part I. If we are
not getting the posting automatically we can forcefully do the transaction.

Address : the Address of the place from where the material are removed will
be given here. It will be useful in the Excise Invoice.

EI Capture : capture the excise invoice at the time of goods receipt.

Post EI in MIGO : automatically the FI Entry will be created at the time of
MIGO for vendor Credit.

Duty different at GR : to change excise duty amount at the time of posting

excise invoice.

EI create / RG23D : specifically for the dealers , from where they have
procured the material and to whom they have sold. They will pay the Excise
duty to the vendor and the same will be collected from the customer.

Update RG1 : Part will be updated.

Part II at J1IEX.

Same path “Maintain series group” : we will be creating the excise groups
and attaching them with the series groups, generally used for exports of the

Same path “Maintain Postal Address”

In this IMG activity, you maintain the addresses of various customs

and excise organizations that your company deals with.

You use these addresses in the ARE Documents functions. When you create
an ARE-1 or ARE-3, you enter the address of the excise department and the
customs department involved in the export process. The system then prints
their names and addresses on the AREs.

You can then define a default local excise department for each excise group
and a default customs department for each series group.
Same Path “Maintain Excise duty Indicators”

Next Same path “Determination of Excise Duty”

Select Tax Calculation procedure

TAXINJ – Old procedure with 2% Edn. Cess.

TAXINN – New one with addl 1% Edn. Cess.

Same Path “ Maintain Excise Defaults”

In this IMG activity, you define which tax procedure and pricing condition
types are used in calculating excise taxes using formula-based excise

If you use condition-based excise determination, fill out the

CVD cond. field and leave all the others blank.

If you use formula-based excise determination, fill out all of

the fields as follows:

 Enter the tax procedure and the pricing conditions that

are relevant for excise tax processing.

 Specify the purchasing and sales conditions types used

for basic excise duty, additional excise duty,
special excise duty, and cess.

 Specify the conditions in the sales order that are used

for excise rates.

 Specify the countervailing duty condition type used

for import purchase orders.
See also

SAP Library -> Logistics -> Country Versions -> Asia-Pacific

-> India -> Materials Management (MM) -> Condition-
Based Excise Determination and -> Formula-Based Excise

You must consult the MM consultant and find out what are the conditions he
will be using in the pricing conditions and better give them here.

Next in the same path Define Tax code purchasing Documents

Next is Classify Condition Types

We have to maintain the Chapter IDs. The T.Code is J1ID to create a

Chapter ID. It is only for giving to the user.

Assign users to material master screen – is just like creating the end user
roles to grant access to the users.
Define form types : there are standard form types available, like standard
registers, we need not create a new forms.

Next is Account Determination

Define GL Accounts for Taxes
Here will assign the general ledger accounts to which the values are to be

Generally we have to assign accounts for JI1 for basic excise duty.
Here accounts to be attached are the Clearing accounts which are the
intermediary accounts basing the Input / Output, which are attached to
individual tax codes.

Specify Excise Accounts per Excise Transaction

The Transaction Types available are

First three Challans are no more needed in the present day.

Description for Transaction Types

CAGI - for removing the capital goods outside the factory.
CAPE – for availment of cenvat credit on capital goods
CEIV – for cancellation of the excise invoice before taking credit (plant to
plant transfer invoices /
DIEX – for supplementary Invoices raised by the vendor (price change etc)
DLFC – for Excise Invoice
EWPO – for recording the Vendor Invoice and availing credit when there is
no Purchase order T.code J1IB. Create Invoice in J1IA.( can be done thru
GRPO – Goods receipt against Purchase Order
MRDY – reversal of the entry with out reference to any document but basing
on some directions
MRRD – J1IH T.Code – for providing some expenses paid to the officers for
over staying in the company etc
MRWO – Write off the credit which is eligible (is back dated)
OTHR – Plant to plant movements and Rejections etc.
TR6C – Treasury Challan (for PLA), submit to the bank and when the
amount is credited to the department, we can utilize that credit.
PLA on Hold A/c Dr
Bank A/c Cr
Do transaction J1IH to make entry click on TR6 Challan Tab
PLA A/c Dr
PLA on Hold A/c Cr

UTLZ – utilization J2IUN for making the payment at the month end it will
carry what accounts to be debited and credited.

Here you can make utilization from the existing input tax credit available
from the RG23A and RG23C and PLA and ED payable accounts.
Excise Duty Payable DR 100%
RG23A CR 50%
RG23C CR 30%
PLA CR 20%
Specify GL Accounts per Excise Transaction

Here we will define all the GL Accounts that are to be populated when
a particular transaction is executed.

Business Transactions

Select Fields – Like Screen Variants

Define processing Modes per transaction

In this transaction code we will provide the Processing modes that are
activated for each of the transaction code.
Specify which movement types involve Excise Invoice

Movement types available in sap

Assign Billing types to Delivery Types

Maintain Default Excise Groups and Series Groups

Sub Contracting

These two settings are obsolete as of now



Excise Registers

Copy the forms from the standard and save it for your company codes.

Number Ranges

For all the above objects which the user is using, we have to create the
number ranges. And every year these number ranges shall be initialized.
User Level Transactions


Make Material and Chapter ID combination

Make the material Available for Excise
Cenvat Determination
Vendor Excise Details
New requirement by law is 57AE register to be submitted which contains all
the details of the vendor hence this vendor excise details will be helpful in
preparation of the above register.
Customer Excise Details
Useful to populate the customer details at the time of creation of the excise
SSI Rates – Identify the indicator defined the rate and what rate to be picked
must be provided here
Excise Indicator Plant
Excise Indicator for Plant and Vendor
Excise Indicator for Plant and Customer
Excise Tax Rate
Cess Rates
J1ILN – India Localization Menu

Use this to check if there are any left outs in the customization
Printing and downloading of the Excise Registers is only possible if the
Excise registers are extracted.

Caution: Once the registers are extracted no excise postings will be possible
to the registers.