Inter unit Transfer

[RAM SHARMA]

Dear Experts,

We are registered manufacturer in central excise. We want to send our child part to our 11nd unit from 1st unit for further production. Our 11nd unit manufactured semi finished product and again send to 1st unit for manufactured final product. how can we do that all these procedure in excise point of view and what will be the legal obligation.

Thanks

[PAWAN KUMAR]

As per my view, the job work procedure under Notification 214/86-CE Dated 25.03.1986 can be followed.

[RAM SHARMA]

What will be the procedure of cenvat credit taken. The accumulation of cenvat credit will be higher in 11nd unit.

[Mritunjay Kumar]

Dear Mr. Ram,

The unit I will take credit of the semi-finished goods transferred from unit II. The Unit II will pay the excise duty at the value determined under Rule 8 of Central excise Valuation Rules.

Regards, 

Mritunjay Kumar.

AI Summary

CENVAT credit for inter unit transfers: receiving unit claims credit while transferor pays duty under valuation rules. Inter unit transfers can follow the job work procedure under Notification 214/86 CE; the receiving unit may take CENVAT credit of semi finished goods received, while the transferring unit must pay excise duty on such transfers at the value determined under the applicable valuation rules, resulting in higher CENVAT accumulation in the receiving unit.