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Excise requirement on inter unit transfer of goods

vinod k arora (practice) (34 Points)

10 November 2011

If a company has two manufacaturing units functioning adjacent to each other with similar type of product. The excise registration of both the units is separate though VAT registrtion is common. Sometimes it happens that some of the inputs requried at one unit is not available with it but is available with the other unit. What would be the excise procedure for transfer of such inputs from one unit to the other unit.

Further if a unit has placed order for the input, can the lorry conatining the same be diverted to the other unit or it will be necessary to first unload the material at the unit which placed the order and then reload and transfer to the other unit. What documents shall be requried for such transfer.

Thanks

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5 Replies

CA Unnikrishnan Nair N (Chartered Accountant) (2083 Points)
Replied 11 November 2011

If cenvat credit has been taken, tranfer to other unit is possible only by raising invoice on the transferee unit . This is to pass on the cenvat credit. Also give a declaration in the invoice that being interunit transfer no sale is involved and hence not VAT. Answer to second question is yes, provided the invoice does not contain buyers CE registration number.

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HS Negi (Senior Executive- F&A) (590 Points)
Replied 11 November 2011

Dear Vinod K Arora

You can transfer the input from one unit to another unit , This is called " Input such as cleared ".It will not be your production. You have to reverse the cenvat credit in proprtionate to material transfered.

Secondly, Only consignee is the befificery to avail the cenvat credit then he can reverse the cenvat credit on his invoice.

Regards

HS Negi

Ram kr. (Buisness) (883 Points)
Replied 01 March 2012

How can we treat as a sale inter unit transfer and take cenvat credit. After received inter unit input,Can we sale this material. Pl.explain.

Thanks

Amitabha Mukherjee (Sr. Manager, GST) (253 Points)
Replied 03 March 2012

matter is very simple,

Q.1) you just avail the credit and make your own (sale) excise invoice to your another Unit after deducting proprtionate duty that you availed. This is called SALE OF INPUTS AS SUCH

Q.2) Only consignee is the eligible to get the credit, First you reced the materials and take credit (full credit), then whatever amount(Qty) you want, you can send to other unit as SALE OF INPUTS AS SUCH after deducting proprtionate excise duty.