Removal of goods
This query is : Resolved
30 March 2013
Dear Sirs
1.We have a plant at Manesar and Chennai .We are going to start supplies of components / Engine parts to Hyundai.
2. The stock transfer will be made from Manesar (Gurgaon- Haryana) plant to Chennai plant.
3.Invoice will be made at Chennai plant and delivery will be made at Hyundai.
4.The parts will be mainly bended steel tubes and packed in carton boxes will be transferred from Manesar to Chennai .
5.In Chennai Plant the goods would be unpacked and air blown on clean air work cabinet table and there after visually checked for sealing surface of flair under magnifier and if found ok then taken to the next operation and if not ok scrapped.
6.The O.K parts are checked for profile by use of profile gauge and if ok it is taken to the next operation of air blowing inside the pipe at 5 bar pressure if not ok then scrapped.
7.There after plastic protection cap is put on both ends of the pipe to avoid dust and then packing is undertaken in set of 10 in a polythene bag with an identification tag and signature of the inspector and there after dispatched to Hyundai in plastic bins
8.I need your kind advice on excise procedure to be followed from Chennai plant of the above transferred parts from Manesar plant.
1.We have a plant at Manesar and Chennai .We are going to start supplies of components / Engine parts to Hyundai.
2. The stock transfer will be made from Manesar (Gurgaon- Haryana) plant to Chennai plant.
3.Invoice will be made at Chennai plant and delivery will be made at Hyundai.
4.The parts will be mainly bended steel tubes and packed in carton boxes will be transferred from Manesar to Chennai .
5.In Chennai Plant the goods would be unpacked and air blown on clean air work cabinet table and there after visually checked for sealing surface of flair under magnifier and if found ok then taken to the next operation and if not ok scrapped.
6.The O.K parts are checked for profile by use of profile gauge and if ok it is taken to the next operation of air blowing inside the pipe at 5 bar pressure if not ok then scrapped.
7.There after plastic protection cap is put on both ends of the pipe to avoid dust and then packing is undertaken in set of 10 in a polythene bag with an identification tag and signature of the inspector and there after dispatched to Hyundai in plastic bins
8.I need your kind advice on excise procedure to be followed from Chennai plant of the above transferred parts from Manesar plant.
30 March 2013
I have understood your query, however the reply to the same cannot be drafted without discussions in person. Different modalities have to be worked out for proper planning.
E: ashish.vh@gmail.com
+91-9654726747
E: ashish.vh@gmail.com
+91-9654726747
31 March 2013
Thanks , I will come back to you .
21 July 2025
Your query involves inter-state stock transfer and excise compliance (as of March 2013), concerning movement of parts from your Manesar (Haryana) plant to Chennai (Tamil Nadu), followed by processing and dispatch to Hyundai. Since this is pre-GST (which came in July 2017), the Central Excise and VAT laws apply.
✅ Background Summary (Pre-GST, March 2013)
Stock is transferred from Manesar to Chennai (both your plants).
Final invoice is raised from Chennai to Hyundai.
Goods are inspected and lightly processed (cleaning, capping) at Chennai.
Final goods are dispatched from Chennai to Hyundai.
🧾 Excise Implications – Key Points
✅ 1. Is it a Stock Transfer or Job Work?
Since both plants belong to the same legal entity, the transfer from Manesar to Chennai is a stock transfer, not a sale. But excise duty may still apply based on the level of processing and removals.
✅ 2. Excise Treatment at Manesar Plant:
Since Manesar is clearing the goods to another unit of the same company (Chennai), and the goods undergo further processing at Chennai:
You can transfer goods under a stock transfer (non-duty paid) using excise Rule 4(5)(a) procedure, similar to job work.
Or, if Chennai is also a registered excise unit, you may clear the goods under excise invoice on payment of duty, and Chennai can take CENVAT credit.
Option A: Without payment of duty under Rule 4(5)(a):
Manesar sends goods under challan (triplicate) – no duty is paid.
Chennai must return final goods or maintain processing records.
Option B: With payment of excise duty:
Manesar clears goods with excise invoice on payment of duty.
Chennai takes CENVAT credit of duty paid.
Final goods are cleared to Hyundai under fresh excise invoice.
Which option is used depends on your excise registration setup and administrative preference.
✅ 3. Excise at Chennai Plant:
Since Chennai does inspection, cleaning, air blowing, capping, packing, etc., this is considered “manufacture” under Central Excise, especially if there's a change in character, use, or value.
Chennai must be registered with excise.
Final clearance to Hyundai must be on payment of excise duty.
If Chennai took CENVAT credit of duty paid by Manesar, it can offset the duty payable on final clearance.
🔁 CENVAT Credit Flow
If duty is paid at Manesar:
Chennai can avail CENVAT credit.
Reduces double taxation on same goods.
If goods are transferred without duty:
Then Chennai must pay full excise duty on finished goods (value-added basis).
Must maintain challan-based job work accounting.
📝 Recommended Actions
Register both Manesar and Chennai under Excise (if not already).
Use excise invoice (with duty) if you want seamless CENVAT flow.
Maintain proper records of:
Challans (if transferring without duty)
Job work logs
CENVAT credit register
Ensure valuation at Chennai is proper:
You must follow Rule 8 of Valuation Rules if both units are related (same company), i.e., assess value based on cost + 10% profit.
Raise final invoice from Chennai to Hyundai with full excise duty.
🚨 Important Notes
If Chennai is not a manufacturer under excise (i.e., activities are below "manufacture" threshold), then no duty payable at Chennai. Manesar must then pay full duty on clearance.
Periodic excise returns (ER-1 or ER-3) must be filed.
✅ Background Summary (Pre-GST, March 2013)
Stock is transferred from Manesar to Chennai (both your plants).
Final invoice is raised from Chennai to Hyundai.
Goods are inspected and lightly processed (cleaning, capping) at Chennai.
Final goods are dispatched from Chennai to Hyundai.
🧾 Excise Implications – Key Points
✅ 1. Is it a Stock Transfer or Job Work?
Since both plants belong to the same legal entity, the transfer from Manesar to Chennai is a stock transfer, not a sale. But excise duty may still apply based on the level of processing and removals.
✅ 2. Excise Treatment at Manesar Plant:
Since Manesar is clearing the goods to another unit of the same company (Chennai), and the goods undergo further processing at Chennai:
You can transfer goods under a stock transfer (non-duty paid) using excise Rule 4(5)(a) procedure, similar to job work.
Or, if Chennai is also a registered excise unit, you may clear the goods under excise invoice on payment of duty, and Chennai can take CENVAT credit.
Option A: Without payment of duty under Rule 4(5)(a):
Manesar sends goods under challan (triplicate) – no duty is paid.
Chennai must return final goods or maintain processing records.
Option B: With payment of excise duty:
Manesar clears goods with excise invoice on payment of duty.
Chennai takes CENVAT credit of duty paid.
Final goods are cleared to Hyundai under fresh excise invoice.
Which option is used depends on your excise registration setup and administrative preference.
✅ 3. Excise at Chennai Plant:
Since Chennai does inspection, cleaning, air blowing, capping, packing, etc., this is considered “manufacture” under Central Excise, especially if there's a change in character, use, or value.
Chennai must be registered with excise.
Final clearance to Hyundai must be on payment of excise duty.
If Chennai took CENVAT credit of duty paid by Manesar, it can offset the duty payable on final clearance.
🔁 CENVAT Credit Flow
If duty is paid at Manesar:
Chennai can avail CENVAT credit.
Reduces double taxation on same goods.
If goods are transferred without duty:
Then Chennai must pay full excise duty on finished goods (value-added basis).
Must maintain challan-based job work accounting.
📝 Recommended Actions
Register both Manesar and Chennai under Excise (if not already).
Use excise invoice (with duty) if you want seamless CENVAT flow.
Maintain proper records of:
Challans (if transferring without duty)
Job work logs
CENVAT credit register
Ensure valuation at Chennai is proper:
You must follow Rule 8 of Valuation Rules if both units are related (same company), i.e., assess value based on cost + 10% profit.
Raise final invoice from Chennai to Hyundai with full excise duty.
🚨 Important Notes
If Chennai is not a manufacturer under excise (i.e., activities are below "manufacture" threshold), then no duty payable at Chennai. Manesar must then pay full duty on clearance.
Periodic excise returns (ER-1 or ER-3) must be filed.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Treatment of Profit on sale of fixed assets
- Procedure and Documents Required for Release of FD from DVAT
- TDS whether applicable or not in case of Flat purchase
- Ewaybill Material value reg
- Transfer of Rectification Rights to the Jurisdictional Assessing Officer
- SALES MADE THROUGH E COMMERCE OPERATOR 9(5)
- Which ITR application
- Transfer of rectification rights to ao
- SEA GOING ALLOWANCE
- IGST Refund pending since June 2022.
- Regarding Tax Audit of Parternship firm (In case of first year)
- Supplementary audit
- E proceeding query u/s 143(2) for a.y. 24.25
- REQUEST FOR HELP IN TALLY THE BALANCE SHEET
- CHANGE IN PARTICULARS OF DIRECTOR
- Non- payment of GST on supply of services- reg
- Accumulated surplus exceeding 15%
- Different GST Number MEESHO
- Fees amount transfer procedure for two doctors
- Notice u/s 148 of IT Act
Trending Online Classes
CAclubindia
