Inter unit Transfer

[RAM SHARMA]

Dear Experts,

We are registered manufacturer in central excise. We are produced different type of product in our one plant and another plant. We want to transfer some product to another plant. What will be the excise formalaty in this regard, secondly can we take cenvat credit on this product in another plant.

Thanks

[MUKUND THAKKAR]

Dear Sharma,

your  question  is  not clear, you want  to  transfer  the  finished  goods or rawmaterial,? or  transfer  the product raw material at other units.? 

if  you  plan to  transfer  the  inputs (RM)  than you  have  to pay the exciseduty as input  as  such. and  take cenvat  credit  in another plant. but..

2, if  you  plan to  transfer  the  FG  to  your  other  plant, than  you have  to  pay  excise duty from your  existence  plan &  no cenvat  credit  is  avaible to  your  another plant.

3. if  your  product  is  semi finished  and  another  process will be  carried  out  on another plant , in  such  situation , you  can  take  the  cenvat  credit. 

[Guest]

• If you are transferring Inputs you have to pay excise duty equal CENVAT credit availed on such inputs.
• If you are clearing products manufactured by you to your other unit which are going to used  for further manufacturing by your other unit, then, excise duty will have to be discharged on 110 percent of the cost of production / manufacture of such goods under Rule 8:

 RULE 8.Where the  excisable goods are not sold by the assessee but are used for consumption by him or on his behalf in the production or manufacture of other articles, the value shall be [one hundred and ten per cent] of the cost of production or manufacture of such goods.

[RAM SHARMA]

As per rule 8, weather a unit take cenvat credit of material received by inter unit for self consumed. 

[Guest]

Rule 8 is for valuation for discharge of duty liability.

However, the recipient unit can avail CENVAT credit if the the item received is used in / in relation to manufacturing and on clearance of which Duty is discharged.

 

[RAM SHARMA]

We have given a contract to out side party for developing and fabricating capital goods in our premises as per our norms. We are providing all material for such capital goods. After developed the such capital goods we want transfer to our other unit.

Secondly, we want some material for lab testing to our inter unit. what will be the legal procedure both the cases. 

[Guest]

Please refer your issue to Advocate since your new query would need lot of discussion / answers.

[phaniraju konidena]

1. If you want to clear your input goods (raw material) then you can take first the CENVAT credit and debit  the same proportionately at the time of clearing the goods 'as such' by mentioning all the details of purchase invoice on your own excise invoce.

2. If you want to clear your Finished Goods to your other unit for 'captive consumption' (for further manufacture of excisable goods) purpose, then you pay the central excise duty as applicable subject to the price adopted to the independent buyers as per Rule 4 of Valuation Rules, 2000. basing on the Larger Bench decision in the case of "ISPAT INDUSTRIES LTD.,"

OR

If the independent buyer's price is not available, in the sense, the entire production is cleared to your other unit for captive consumption, then you have to pay the Central Excise duty as per CAS-4 under Rule 8 of Valuation Rules, 2000.

 

[Anup Kabra]

we are manufacturer of pharmaceuticals product having 4 units id different jurisdiction.

my question is can we transfer cenvat credit one unit to another unit without transfer of any FG/RM/PM and semi finished goods.

[phaniraju konidena]

Dear Mr.Ram Sharma,

a) Vide Notn.No.14/2013-CE(NT) dtd.22.11.2013 (w.e.f 01.12.2013), the Rule 8, 9 and 10 of Valuation Rules, 2000 have been amended. Accordingly, if the finished excisable goods are cleared to your other units of the same company for further manufacture (Captive consumption) then you have to pay the duty @110%.

b) if you want to clear the raw material to your other units, then you have to reverse the duty proportionately the cenvat credit availed.

c) there is no option in the Central Excise law to simply transfer the cenvat credit from one unit to other unit, which is only possible if you are in 'Large Taxpayer Unit'.

[YAGAY andSUN]

Dear Anup/Phani Raju,

Rule 12A of CENVAT Credit Rules, 2004 has been amended so as to disallow transfer of credit by a large taxpayer from one unit to another.

This is for your kind information.

Regards

Team YAGAY and SUN

(Management and Indirect Tax Consultants)

[Mahir S]

Mr. Anup,

In your case, you can transfer the cenvat credit availed on Additional duty due to import of goods, from one unit to your another unit.

AI Summary

Manufacturer Seeks Guidance on Excise Duties for Inter-Plant Transfers; Rule 8 Valuation and CENVAT Credit Explained A manufacturer registered under central excise seeks guidance on transferring products between plants and the applicable excise formalities. Experts clarify that if inputs are transferred, excise duty must be paid, and CENVAT credit can be availed at the receiving plant. For finished goods, excise duty is payable, but no CENVAT credit is available. If goods are semi-finished, CENVAT credit can be availed. Rule 8 dictates valuation for inter-unit transfers used in further manufacturing. The discussion also covers the transfer of CENVAT credit between units, which is restricted unless under a 'Large Taxpayer Unit.'