Excise duty credit on finished stock at additional place of business.

[SHIVKUMAR SHARMA]

Dear Experts

One of my friend having manufacturing unit at Surat and having additional place of business also at surat.They have lying few quantity of duty paid finished goods in closing stock at additional place of business on 30.06.2017,

Please confirm whether we can avail input tax credit of excise duty involve in closing stock at additional place of Business while filing GST TRN-1.

Please not that stock lying on 30.06.2017at additional place of business was not shown in ER-1 of June 2017 as the same was duty paid goods.

please share your expert opinion at the earliest

Thanks & Regars

[Rajagopalan Ranganathan]

Sir,

Since it is duty paid stock at the Additional place of business you can sell it as such. You cannot treat it as closing stock and take credit of the excise duty already paid under transitional provision. This is my view.

[Himansu Sekhar]

This is an issue which is to be solved by board. For taking benefits of credit of excise duty paid from the manufacturing unit to the additional place of business (say a depot) located in the same state, it is better to declare it as a business vertical. Provisions are not clear otherwise. Purely personal. Please discuss vividly. I am interested for a solution.

[Ganeshan Kalyani]

With due respect to experts view, i would like to submit my views as under:

Under central excise factory had separate excise registration and additional place did not had excise registration.

Now, manufacturing unit will claim input credit on inputs, capital goods and service tax credit. The excise excess credit shown in the return of June 2017 can be claimed in GST by carry forwarding the same in GST TRAN 1.

The closing stock which is lying at depot (additional place of business) is an excise paid stock. Those stock will be sold by applying GST rate. So input tax credit contain in the closing stock is eligible as credit. This can be claimed in GST by showing in GST TRAN 1.

[Himansu Sekhar]

Question which is to be resolved- own invoice will not be a valid document for taking the credit in case of any existing as we see. Further to transfer bthe credit, the same should have been the closing balance of the er 1 return last filed.

[KASTURI SETHI]

I support the view dated 20.9.17 of Sh.Himansu Sekhar ji and the views of Sh.Ganeshan Kalyani Ji.

[SHIVKUMAR SHARMA]

Shri Kalyaniji /shri Himanshu

On Which document basis we take ITC in TRN-1 as we have only our own Invoice at our Additional place of Business.Please advise suitably.

[Himansu Sekhar]

This so the major concern I have also raised.

[KASTURI SETHI]

Your cenvatable purchase invoices not more than one year old is the basis of TRANS-1 along with closing balance as on 30.6.17 shown in ER-1 return or VAT returns.

[KASTURI SETHI]

Sh.Himsnsu Sekhar Ji,. We should not forget that Sh.Shiv Kumar Sharma is himself an expert. I always read his replies with eagerness and with an intent to get something new that is new idea. It is a fact and not exaggeration.

[Himansu Sekhar]

No doubt about his enormous contribution and my due regards for his knowledge and wisdom.

The issue he has raised is a genuine concern of many a persons. We need a solution.

[Ganeshan Kalyani]

Stock lying at factory- -- the input credit is availed and utilised. The closing credit balance of input tax is shown in the excise return. The same closing credit can be disclosed in GST TRAN 1 and claim the credit in GST.

Stock lying at depot of a factory- -- the stock lying at depot as on 30th June 2017 is supported by duty paying document. The depot was not able to claim credit in erstwhile law. Now in GST the eligibility is given to depot having duty paying document to claim 100% credit. Hence the depot can calculate the excise credit and show in GST TRAN 1.

[Ganeshan Kalyani]

Yes the invoice should not be more than a year.

Further there can be so many type of stock. The one which i have explained in my previous reply is that stock which is received from its factory. There can be stock which is received from a factory of third party. The treatment of credit eligibility is same in this case.

There can be stock received from a depot of a third party as well. In that case duty paying document would be absent. In those stock the duty is obviously there. So the credit is not 100% but 60% or 30% as the case may be.Thanks.

AI Summary

Excise duty credit on transitional stock may be claimed in TRAN 1 if supported by duty paid documents and returns. Eligibility to carry forward excise duty credit in TRAN 1 for finished goods at an additional place of business turns on documentary support and prior returns: duty paid stock supported by duty paying invoices and reflected as closing balances in ER 1 or VAT returns can be disclosed in TRAN 1 and claimed as transitional credit, whereas stock lacking such documentation (including certain third party depot receipts) may be ineligible for full credit and attract partial treatment; invoices should generally not be older than one year.