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Recording Material In and Material Out Transactions (Excise for Manufacturer)

Recording material in and material out transactions is required for companies with more than one excise unit that may need to transfer raw materials or finished goods from one unit to another. A manufacturing unit has to be registered as a Large Tax Payer Unit (LTU) to allow inter-unit transfer of goods without duty liability.

If a company is not registered as an LTU, then excise duty is applicable on inter-unit transfers. This transfer of goods affects only the inventory books, and not the financial reports of the company. The manufacturer should still be able to book the duty liability as applicable.

For example, National Enterprise is not a registered as an LTU. National Enterprise transfers 100 nos. of Oval Eyeglasses – T1234 to their inventory unit National Enterprise II. The transfer of goods from National Enterprise will be considered a regular clearance of stock with 12.5% of excise duty applicable on the stock transfer.

 

Stock Transfer Out

To record material out transaction

  1. Gateway of Tally > Vouchers > press F10 (Other Vouchers) > type or select Material Out.
    Alternatively, press Alt+G (Go To) >type or select Create Voucher > press F10 (Other Vouchers) > type or select Material Out.
  2. Press Ctrl+H (Change Mode) > select Excise Invoice.
  3. Press F12 (Configure).
  4. Set the option Allow modification of Nature of Removal to Yes.
  5. Press Ctrl+A.
  6. Select National Enterprise as the Tax Unit.
  7. Select Excise Book Name from the List of Excise Books.
  8. Select the branch ledger as the Party’s A/c Name.
  9. Select Inter Unit Transfer as the Nature of Removal.
    Note: To enable the option Inter Unit Transfer as the Nature of Removal:
     - Press F11 (Features) > set the option Enable Excise to Yes.
     - Enable the option Set/alter excise details.
     - Press F12 (Configure).
     - Set the option Enable Large Tax Payer Unit (LTU) to Yes.
     - Press Ctrl+A to save.
     - Set the option Is company a Large Tax payer Unit (LTU) to Yes in the Excise Registration Details screen.
  10. Select the required Destination Godown.
  11. Select the Stock Item to be transferred.
  12. Enter the Godown, Quantity and Rate in the Stock Item Allocations screen.
  13. Select the Excise Duty ledger. The completed Material Out voucher is as shown below:
  14. Press Enter to save.
  15. Select Yes for the message prompt Create Liability Voucher. A journal voucher with the flag Excise Duty on Movement of Stocks is automatically created to raise the tax liability as shown below:

 

Stock Transfer In

National Enterprise received 500 set of light filtering lens from their branch unit. Basic excise duty of 12.5% is applicable on the stock transfer of goods.

To record material in transaction

  1. Gateway of Tally > Vouchers > press F10 (Other Vouchers) > type or select Material Out.
    Alternatively, press Alt+G (Go To) > Create Voucher > press F10 (Other Vouchers) > type or select Material Out.
  2. Press Ctrl+H (Change Mode) > select Excise Invoice.
  3. Select National Enterprise as the Tax Unit.
  4. Select Excise Book Name from the List of Excise Books.
  5. Select the branch ledger as the Party’s A/c Name.
  6. Select the required Destination Godown.
  7. Select the Stock Item to be transferred.
  8. Enter the Godown, Quantity and Rate in the Stock Item Allocations screen.
  9. Select the Excise Duty ledger. The completed Material In voucher transaction appears as shown below:
  10. Press Enter to save.
  11. Select Yes for the message prompt Avail Cenvat Credit.
    A journal voucher with the flag Excise Duty on Movement of Stocks is automatically created to avail CENVAT credit as shown below:
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