Just to be clear, the deformation will make it appear that the surface of the planet has sunk in. However this effect does not "stack" and you can't carve the planet up using it.
If things are working properly you should be able to see the surface of the planet being pushed in a bit, if you look at the impact from a low angle, or rotate the camera so the impact crater is on the silhouette of the planet.
In order for that feature to work though, you need to have decals and deformation enabled in your graphics settings, as well as having a graphics card that supports "Vertex Displacement"
That said, if you're still having issues, I'll need more information to help you out. Such as the make and model of your video card, and your error logs, to see if there's a problem with the shaders that control the special FX.