stock transfer under excise

[Anil Jangid]

DEAR SIR,

I WANT TO KNOW ABOUT EXCISE DUTY IN CASE OF STOCK TRANSFER TO HEAD OFFICE.OUR UNIT IS EXCISABLE UNIT AND WE WANT TO TRANSFER SOME FINISHED GOODS TO OUR HEAD OFFICE MUMBAI OUR HEAD OFFICE IS EXCISE EXEMPTED

1- WILL WE CHARGES EXCISE DUTY AT THE TIME OF STOCK TRANSFER TO HEAD OFFICE . 2-ANY CONDITION ABOUT STOCK TRANSFER

THANKS

(ANIL JANGID)

[YAGAY andSUN]

Excise duty is required to be paid on cost +10%. Stock transfer should not be perceived as preconceived sales.

[DR.MARIAPPAN GOVINDARAJAN]

Thanks for the valid information furnished.

[Ganeshan Kalyani]

Excise is payable on removal of goods from factory hence duty is payable on stock transfer.

[KASTURI SETHI]

I agree with both Sh.Ganeshan Kalyani, Sir and M/s. YAGAY AND SUN, Sirs. I intend to elaborate further. In case the goods are to be transferred to your own unit/sister concern, then Central Excise duty will be paid on 100% plus 10% of cost of manufacture of goods under Rule 8 of Valuation Rules, 2000 and if stock is transferred to a depot, premises of consignment agent or any other place or the premises where the goods are to be sold after clearance from the factory duty will be paid on transaction value under Section 4 of the Central Excise Act. Here you want to transfer the goods to your Head Office which is neither registered as depot nor a unit for captive consumption. Head Office is covered under 'any other place' So method of valuation depends upon how the goods are disposed of from Head Office. On stock transfer basis duty has to be paid since the goods stand removed from the factory and duty is to be paid at the time of removal from the factory whereas VAT is to be paid only at the TIME OF SALE from depot, or any other place where the goods are to be sold. Thus you save VAT for the time being or keep VAT pending till the goods are sold.

So methodology of valuation depends upon how the stock transferred goods are disposed of from Head Office. Normally excisable goods are either transferred to a warehouse or any other place or premises where the goods are permitted to be deposited without payment of duty or are stock transferred to a depot, premises of a consignment agent or any other place or premises from where the goods are to sold after clearance from the factory.

[Ganeshan Kalyani]

Nicely explained by Kasturi Sir.

AI Summary

Excise duty on stock transfers: duty arises on removal; valuation depends on whether transfer is to own unit or depot. Stock transfers from an excisable factory to a head office attract excise duty because duty is leviable on removal; the head office, not being a depot or registered unit, is treated as 'any other place' and duty must be paid at removal. Valuation depends on destination: transfers to own units use the cost plus method under Rule 8, whereas transfers to depots or consignment premises are valued by transaction value under Section 4. VAT is payable only upon sale from the depot or selling premises.