Float stock movements

[Guest]

Dear Expert,

we r procuring parts from Import and local sourcing, clearing goods under legal metrology act(i.e. declaring MRP for Packaged commodity) as parts of our opern.We are moving some float units viz,Engines,cabins,gear box, etc, to unregistered location to support customer requirements for certain period of time and similarly will return back of some times. All materials would get insured based on transactions.

How can we move these parts in such locations,documentation process- plz advise me

[YAGAY andSUN]

Dear Sharan,

You may remove such goods on challan and goods must be returned back within 180 days otherwise you would have to pay the equivalent CENVAT credit and when you get these goods back you can avail the CENVAT credit back after closing the challan. For VAT purpose, way bills(if applicable) should be accompanied with such goods and proper account of such way bills should be maintained. Further, if the location of your customer is in other State, then, "Form F" under CST Act,1956 may be applicable. Please check your State's VAT/CST provisions in this matter.

Further, depending on the nature of transaction (i.e. effective control/right to use), VAT/Service Tax can be applicable.

Regards,

YAGAY and SUN

(Management and Indirect Tax Consultants)

[Mahir S]

If some float units viz,Engines,cabins,gear box, etc, are Regularly required to be cleared to unregistered location to support customer requirements for a certain period of time, then you can keep such float items separately and clear from Stores department under - "Returnable gate passes" ; provided you do not avail cenvat credit but you can certainly claim depreciation thereon.

A register can be maintained for issue and receipt of such float items, no need for any excise formalities.

AI Summary

CENVAT credit conditions: temporary removal of float stock requires challan return within a specified period or equivalent CENVAT becomes payable. Temporary removal of parts to unregistered locations may be effected on challan and must be returned within the prescribed period or equivalent CENVAT credit must be paid, with re availment on return after challan closure. Waybills should accompany consignments for VAT and inter state movements may need prescribed transit documentation; VAT or service tax may apply depending on effective control. Alternatively, regularly used float items can be issued under returnable gate passes with an issues-and-returns register, no excise formalities if no CENVAT credit is taken, and depreciation may be claimed.