Stock transfer of finished goods

7548 views 8 replies

ArunRaj

Buyer - Import & Domestic

30 Points Joined January 2014

Dear Experts,

I request your expert opinion with regard to transfer of Finished goods from one unit(A) to another unit (B) which is located in another state. Both the units are registered with Central Excise as Manufacturer.

Our Requirement

Unit A will transfer its finished goods to Unit B for further manufacturing.FG transferred from unit A will be an input for the unit B. Unit B will complete all production process and make the sales to Customers directly, ie, clearance of the final finished products will be from unit B.

Expert opinion required.

1. What is the procedure to be followed for doing the above transaction?

2. How to calculate ED for the same?

3. Whether unit B is allowed to take CENVAT credit since it is an input for them?

4. In Central Excise law, any where any remarks is for such transactions.

5. Please provide Excise notification no or Circular no or Excise rule details for such transaction.

6. What would be the Sales Tax point of View for such transactions.

Looking forward for a faster and suitable reply.

Replies (8)

Arun Kumar Singh

GST Advocate

15220 Points Joined January 2009

Goods will be removed from the A unit after payment of excise duty on assessable value. B will take the credit on the basis of A invoice and pay the duty at the time of removal on assessable value.

DEEPAK ROHERA

Senior Accountant

285 Points Joined January 2012

Unit A remove the finished goods on the payament of Excise duty and Unit B recd this material as raw material than Unit B made the final process than sale it. Unit B can avialed the credit of excise duty which paid by Unit A and as per sale tax point Unit A trf the goods ag FORM F (tax exempt)

karan jit singh

Consultant

1299 Points Joined November 2010

Dear Arun raj, 1. As there are two premises registered, therefore the finished good of unit A is excisable and ED is to be paid accordigly . Factors such as marketability and movability shall be considered. ; 2. In case of specific duty valuation is not relevant but Rate should be considered if excisable goods ,subject to ad valorem basis, from CETA and for calculation of value section 4 (1) (b) shall be applied and rule 8 of CEVR, 2000 shall be considered. Value shall be 110% of the cost of production. ;

karan jit singh

Consultant

1299 Points Joined November 2010

3. Unit B is allowed to take the cenvat cr of the same. 4, All rules are mentioned with explainations. ( you can also refer the foundation case law that is DHARAMPAL SATYAPAL 2005-SC) 5. CBEC CIRCULAR 4/7/2000, 67/ 95 may be referred for more info. Rest rule is mentioned with answers

karan jit singh

Consultant

1299 Points Joined November 2010

Sales tax points : 1. Sales against form f shall be made _ inter branch stock transfer( as there is no transfer of ownership in goods). Accordingly 2% credit shall be reversed at the time of transfer. 2. Unit B can claim ITC in excess of 2% of tax credit.

ArunRaj

Buyer - Import & Domestic

30 Points Joined January 2014

Originally posted by : karan jit singh

Sales tax points :
1. Sales against form f shall be made _ inter branch stock transfer( as there is no transfer of ownership in goods). Accordingly 2% credit shall be reversed at the time of transfer.
2. Unit B can claim ITC in excess of 2% of tax credit.

Dear Karan,

Thanks for your valuable feedback. But in my further verification i came to understand that in Central Excise there is no concept of stock transfer. In such a situation what type of Invoices to be prepared for such transaction? We cannot raise the sales invoice since there is no payment transaction is taking place. But as per Sales Tax it would be a stock transfer. So please provide me a suitable answer.

ArunRaj

Buyer - Import & Domestic

30 Points Joined January 2014

Hi Can anybody give a suitable reply with regard to this.

karan jit singh

Consultant

1299 Points Joined November 2010

Originally posted by : ArunRaj
	Originally posted by : karan jit singh Sales tax points : 1. Sales against form f shall be made _ inter branch stock transfer( as there is no transfer of ownership in goods). Accordingly 2% credit shall be reversed at the time of transfer. 2. Unit B can claim ITC in excess of 2% of tax credit. Dear Karan, Thanks for your valuable feedback. But in my further verification i came to understand that in Central Excise there is no concept of stock transfer. In such a situation what type of Invoices to be prepared for such transaction? We cannot raise the sales invoice since there is no payment transaction is taking place. But as per Sales Tax it would be a stock transfer. So please provide me a suitable answer.

Yes , there is no such concept of stock transfer for excise. I have explained with the purview of sales tax. Simply you have to comply the rules and invoice shall me made accordingly