Use of MRP indicator for capturing excise duties from dealer

By Anil Verma, KPIT Cummins

Scenario

While procuring from dealers, the dealer's invoicing amount is known but the excise duties amount are not known at the time of PO creation. The invoice price is taken as the PO price and the excise duties aren't calculated in the PO.

To capture the excise invoice corresponding to the incoming goods and to take credit for the excise duty component in the dealer's price, it is required to split the PO price into its two components - the excise base value and the excise duties amount.

In the transaction J1IEX or the transaction MIGO (in the excise item tab), the PO price defaults as the excise base value. The excise duty components are displayed as zero since this is computed as zero. If the excise duty value is manually changed and enter is pressed, the inserted value disappears. 

Solution

In order to change the excise duty value and the excise base value in J1IEX or in the transaction MIGO (in the excise item tab), we must make use of the MRP indicator. 

Capturing excise invoice through MIGO transaction -

The MRP indicator can be found by clicking on the 'More documents' button on the Excise invoice tab at the header level. This pops up a screen containing the 'Miscellaneous' tab. This tab contains a check box for MRP indicator. This MRP indicator checkbox must be ticked and then the excise base value and the excise duty values can be changed. Please note - the sum of the excise base and the excise duty values must always equal to the PO price. This is because in this step, the PO price is being divided into two components - the excise base value and the excise duty value.

The goods valuation will change accordingly. The material account will be debited with the excise base amount and not the total PO price amount.

Capturing excise invoice through J1IEX transaction -

The MRP indicator can be found on the ‘Miscellaneous’ [tab at the header level in J1IEX transaction. There is a checkbox for the MRP indicator on this tab. This MRP indicator checkbox must be ticked and then the excise base value and the excise duty values can be changed. Please note - the sum of the excise base and the excise duty values must always equal to the PO price. This is because in this step, the PO price is being divided into two components - the excise base value and the excise duty value. 

At the time of invoice verification, the base amount must be entered as the changed excise base amount at the time of capturing the excise invoice, either thought J1IEX or MIGO. Then the tax can be calculated on this amount. This will sum to the PO price, which is the dealer's invoicing amount. 

  1. Create purchase order and enter net price (inclusive of base value and excise duties)

  1.  Excise duties not computed. (Excise duties = 0)

3. Capture of excise invoice 

-Capturing excise invoice together with goods receipt through transaction MIGO.

MRP indicator found in the Miscellaneous TAB popped up when you click on more data button on Excise invoice tab at the header level in MIGO

 

The excise base value is defaulted as the PO price and the excise duties are zero. The excise base is changed such that the sum of the excise base value and the excise duties remain the same as the PO price. The excise base is reduced by the excise duty value and the differential amount is split amongst the relevant excise duty components.

Changed value.

Hence the material valuation also takes place correctly with the changed amount put as the excise base value. Otherwise the excise duty value would incorrectly inflate this also.

  1. Invoice verification process through MIRO

Accounting Entries during MIRO.


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