EXCISE DUTY ON INTER-UNIT TRANSFER

[S.C. WADHWA]

	A Company has two units in different citites in Haryana. Both units
	has separate registeration no. of excise and vat. However, Pan No.
	is one i.e. books are consolidated for purpose of profit and loss and
	balance sheet.
	Both units are manufacturing units. One unit also makes goods
	for another unit on raw material provided by such another unit
	and of material purchased by itself.
	When these goods either manufactured out of raw material
	supplied by another unit or purchased by itself is transferred to
	another unit, same is invoiced as 'Transfer of Goods to Branch'.
	Since it is invoiced as such, the receipient does not book in
	its tally.
	Query is
1	Whether the unit can levy excise duty on manufacture of
	such goods supplied to another unit.
2	Another unit is using such goods in further manufacture of
	finished products which is subject to excise duty. Can it
	avail cenvat of excise duty.
3	How another unit can avail cenvat as same is not being
	booked in its tally as same is inter-unit transfer.

[PAWAN KUMAR]

Dear Sir,

As per my view, the reply is as under :

1.Yes, One unit can levy excise duty on goods manufactured and being supplied to another unit.

2.Yes, cenvat can be taken of excise duty paid by one unit.

3.Unit can avail cenvat as Inputs on goods puchased from one unit and use such goods into manufacturing.

[YAGAY andSUN]

Dear S.C.Wadhwa,

Please check Central Excise Rules, 8, 9, 10, 11 read with CAS-4 to understand this concept in better way.

Regards,

YAGAY and SUN

(Management, Business and Indirect Tax Consultants)

AI Summary

Excise duty on inter unit transfers can be levied, with recipient unit eligible for cenvat credit despite branch transfer invoicing. One registered manufacturing unit may levy excise duty on goods it manufactures and supplies to another registered unit; such transfers invoiced as 'transfer of goods to branch' do not preclude the recipient from classifying the goods as inputs and availing cenvat credit of the excise duty paid, subject to appropriate invoicing, registration and documentary compliance.