inter unit transactions - procuders

[venkat eswaran]

Dear All,

We have to open unit-2 shortly as such there are 3 types plan we have in unit-2

1. RM to be procured by Unit-2 and sales from there.

2. Semi finished goods to be removed from Unit 2 to unit 1

3. Finished goods to be removed from unit 2 to unit 1

what is procudres to be followed and what docuemnts we have to maintain?

Whether we can remove finished and semifinished goods from unit 2 to unit 1 without payment of excise duty?

RG1 and ER1 and returuns to be filled separately for both units?

Kindly give ur advice and feedback .

Thanks in advance

Venkat

[YAGAY andSUN]

Dear Venkat,

If there is no further job-work, then, you cannot remove goods without payment of duty from one unit to other unit under the same management.

Further, even if, in the case of stock transfer, you would have to pay the Central Excise Duty, though VAT/CST may not be payable.

It is pertinent to mention here that while removing the goods to your own units, kindly take care of valuation rules under Central Excise Valuation Rules.

In case you need a detailed opinion, then, you may contact us.  We charge a nominal fees for disseminating  our written opinions.

Regards,

Team YAGAY & SUN

(Management & Indirect Tax Consultants)

[venkat eswaran]

Dear Pradeep sir,

Thanks for reply. we request ur clarification on removal of goods from unit 2 to unit 1

our product  pricing is coming under 4A that is under MRP rate for duty pmt

1. when we remove finished product from Unit 2 to unit 1 whether we have to pay duty on 110 percent on cost value or on MRP rate?

2. we hope for removal of semi-finished goods we have to pay duty on 110 percent on cost .

Kindly give ur feedback pl

​Thanks & regards

Venkat

AI Summary

Inter unit stock transfer triggers central excise liability and valuation under excise valuation rules including MRP provisions. Inter unit transfers between units under common management attract central excise duty unless treated as job work; stock transfers cannot be made duty free. Valuation must follow Central Excise Valuation Rules: finished goods chargeable under the MRP provision are assessed on MRP, while semi finished goods are valued on a cost based proxy (including the 110% cost measure where applicable). Maintain separate statutory returns and documents for each unit and retain records supporting inter unit movement and valuation.