Excise on Within State Finished Goods Transfer

[Guest]

Hi,

Please explain me in understanding the treatment, if I have two excisable units in Maharashtra viz Mumbai & Pune. Suppose I have to transfer the finised goods manufactured in Mumbai to Pune, from where the invoicing will be done with other finished items manufactured in Pune Itself. As fas as Vat is concerned, no vat is payable also no F Form requires as it is intra state tranfer. Kindly guide me on two removal from Mumbai & Pune.

[Rajagopalan Ranganathan]

Sir,

While removing the excisable goods from Mumbai factory to Pune factory you have to pay cenvat duty on the goods. Pune factory can take credit of the duty paid on the goods received from Mumbai and utilize the same for payment of duty on the product cleared by Pune factory. This is the procedure to be followed in respect of Central Excise Act, 1944 and the rules made thereunder.

[Himansu Sekhar]

The goods from pine will be cleared from Mumbai with the invoices. If the goods are to be consumed at line, then the value will be 110% of the cost of production. The cost will be determined as per cas4 certificate by a cost accountant. For Cex the two units are different units. As per rule 8,9 of the valuation rules, these clearances are sale clearancesd.

[Himansu Sekhar]

If the goods are not consumed at line, but are sold from there, then there valuation at Mumbai will be the price at which similar goods are sold from pune at their same date.

[KASTURI SETHI]

Dear Querist,

I support the views of Sh.Ranganathan Sir.

[KASTURI SETHI]

A manufacturer of excisable goods is required to assess the clearance of goods under Section 4 i.e. transaction value, if not possible, then Section 4 is to be followed with Valuation Rules.

[Himansu Sekhar]

The valuation will be under sec. 4(1)(b) of CE act . accordingly valuation will be under rule 8/9 of valuation rules 2000. The clearances are to related units. The clearances are not to independent parties. Money is not the sole consideration of sale. Value will have to be determined.

AI Summary

Cenvat credit on intra state transfers allowed; receiving unit may utilize duty credit and valuation follows transaction value rules. Intra state transfers of finished excisable goods require the originating unit to pay central excise duty, while the receiving unit may claim and utilize cenvat credit on the duty paid. Valuation of such related unit clearances follows the transaction value principle and the statutory valuation hierarchy: cost based valuation certified by a cost accountant for consumption in production, and market/comparable price valuation where goods are cleared for sale.