Shifting stock under Excise within the same firm

[Kratant Khandelwal]

Dear All,

I would like some light on the following:

We are a trading concern registered under excise. We are shifting warehouses. The branch firm holds the same TIN, but ECC no is different. Will we become the second stage dealer after issuing the invoice from one branch to the other or will we remain the first stage dealer? Please explain the logic behind it as well.

Much Appreciated.

Kratant Khandelwal

[KASTURI SETHI]

Sh.Kratant Khandelwal Ji,

Registration is premises specific.

As per Chapter 2 (para no.3.3) of CBEC.Excise Manual of Supplementary Instructions, 2005 as amended, separate registration is required for each depot, godown etc. A registered dealer who purchases excisable goods from a manufacturer is a first stage dealer and who purchases from first stage dealer will become second stage dealer. Your ECC No. will also change. Now you can understand well under which category your second warehouse falls. I have given you logic.

 

 

[Ganeshan Kalyani]

Sir, please elaborate on "shifting warehouse". Whether you are shifting warehouse or just invoicing from one warehouse to another with in state.

[Kratant Khandelwal]

Thank you for the swift response. As mentioned by me the ECC no of both the warehouses are different. the TIN is the same. We are shifting our stock from godown no 1 to godown no 2. Both warehouses are within the same city/state.

[Kratant Khandelwal]

Mr. Ganesh kalyani ji

We are shifting the ex stock physically from one warehouse to another warehouse within the same state. We will have to issue a sales invoice from one warehouse to the other ECC no being different. We are the first stage dealer at the moment , will we become the second stage dealers post this exercise?

[Kratant Khandelwal]

Dear All,

While we do agree that the ECC Number of the new premises is different from the existing one but the PAN and the TIN are the same and the Excise Invoice to be issued is not a 'Sale' but a document raised for the purpose of stock transfer. The value of the material will appear under the head of 'Stock Transfer' and not Sale in the old unit and it will again appear as a stock transfer in the new concern and not purchase. Neither is the first unit the 'SELLER' nor is the second unit the 'BUYER'.

Can we choose to be the 'First Stage Dealer' as per the above logic. It will not be out of place to mention that we do not sell to any 'Dealer' who can pass MODVAT since all our sales are to the Actual User OE manufacturers only.

Also, we would like to know the repercussion if we issue Invoices from the new unit as a Second Stage Dealer and the Department says we should have issued them as the first stage Dealer or the other way round, since there is a confusion. In any of the two cases we do not have any issues in acting either as the first stage or the second stage Dealer except that we want it should be done the legal way.

Sorry for bothering you again, despite your earlier reply.

Regards

Ramesh Khandelwal

[KASTURI SETHI]

Sir,

You should have posted your query in detail in the first instance. No issue of passing on Cenvat is involved. No sale is involved.Only STOCK TRANSFER is involved. You want go-downs no. 1, 2 . 3 etc. to be registered with Central Excise for storing duty-paid or non-duty paid goods. When SALE is not involved, where is the issue of First Stage or Second Stage Dealer ? You have made the issue of a non-issue.

[YAGAY andSUN]

In any large companies, it is a common feature to shift the stock from one warehouse to other for various reasons. We do not foresee any issue in this. However, if a different price is being charged in the other warehouse while selling the goods so shifted then central excise duty shall be payable on such differential amount. It is a settled legal position.

[Ganeshan Kalyani]

Sir, Sri Kasturi Sir, whether permission or intimation to Department is required for such shifting. I guess yes. Thanks.

[CSSANJAY MALHOTRA]

Dear Mr. Kratant,

I fully endorse the views of Sh. kasturi ji, as if CENVAT benefit is not to be passed upon, then your company will not be taking excise Registration No at the warehouses, hence the issue of First Stage / Second Stage dealer does not come in.

Further M/s Yagay & Sun has rightly pointed that the differential duty has to be paid if there exists price variance between the prices prevailing at different warehouses for goods cleared from factory on the date of removal.

[KASTURI SETHI]

Sh.Ganeshan Kalyani Ji,

Pl. refer to your query dated 4.9.15. Answer to your query is "YES". It is not a guess. Your common sense has prevailed.Further details are as under:

As per Notification No.35/2001-CE(NT) dated 26.6.2001 as amended read with Para No. 3.3 of Chapter 2 of CBEC's Excise Manual of Supplementary Instructions, 2005 as amended, the information is as under:-

(i) Separate registration is required for each depot, godown etc. If the person has more than one premises requiring registration, separate registration certificate shall be obtained for each of such premises.

(ii) The same application form is to be used for intimating any change in the information furnished originally at the time of applying for registration certificate.

Here intimation to the department regarding any change to the department tantamounts to permission.

 

[Ganeshan Kalyani]

Thanks Sri Kasturi Sir for clarifying my doubts. My knowledge is enriched . Thanks.

AI Summary

Trading Firm's Stock Transfer Between Warehouses: No Change to First Stage Dealer Status; Excise Duty on Price Difference Possible. A trading firm registered under excise is shifting stock between warehouses with different ECC numbers but the same TIN. The query is whether this makes them a second stage dealer. Responses clarify that registration is premises-specific and separate for each location. Since the transfer is not a sale but a stock transfer, the firm remains a first stage dealer. No CENVAT is involved, and the issue of dealer stage does not arise. However, any price difference at the new warehouse may require excise duty on the differential. Notification and registration for each premise are necessary.