Recording of CENVAT Credit Reversal

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As per CENVAT credit rules, the manufacturer is allowed to take CENVAT credit of duties paid on the raw materials used in the production of the final product. However, there are exceptions to this rule and one such exception is defined under Rule 6 of CENVAT Credit Rules 2004. Accordingly, if inputs are used commonly for dutiable and exempted final goods then it is the obligation of the manufacturer to reverse the CENVAT credit attributable to inputs used in or in relation to the manufacture of exempted goods. Note: The reversed CENVAT Credit details have to be captured in Form ER-1 (for Regular Excise Units) and in Form ER- 3 (for Small Scale Units).


Currently, a normal Journal entry can be recorded by crediting Cenvat Reversal A/c (created under Duties & Taxes – Cenvat) for reversing the CENVAT credit. The ledger balance of Cenvat Reversal A/c needs to be entered manually in Row No. 13 of Table 8 of Form ER-1 for regular Excise Units and in Row No. 11 of Table 6 of Form ER- 3 for Small Scale Units.


Resolution for the above stated problem will be provided in Tally.ERP 9 Series B JAS (July, August, September) Release.

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