Stock transfer transaction from exempted zone.

[Anil Gagneja]

Dear Sir,

We have received some inputs  from our customer. They  raised invoice under stock transfer against Form F. The value of goods sent by customer is Rs. 10. 

Further we manufactured the goods and used in our final product and dispatched back to customer. The format of invoice raised by us is as follows :-

Value of goods                                                                  = Rs. 90

Value of  Customer Supplied  goods                        = Rs 10

Taxable Amount                                                               = Rs. 90

CST @ 2%                                                                            = Rs.1.80

Total Amount                                                                    = Rs. 91.80

1. The customer will  issue us  the F Form  for Rs.10 and C Form for Rs. 91.80  against the goods?

Kindly confirm if this procedure is correct..?

Thanks in advance

[YAGAY and SUN]

It seems that you had recevied goods from your customer on a challan for doing the Jobwork by using your inputs or goods.

The method used by you for calculating the Central Excise Duty as well as CST is correct.

 

[Anil Gagneja]

We have received the goods from our customer on invoice against form F., because the inputs utilise in the final products to be manufactured by us.

 

It is mandatory to issue form F against Form F..

AI Summary

Stock transfer tax treatment: CST and excise apply on the jobworker's value; reciprocal issuance of Form F required.
Where a customer sends inputs on Form F for jobwork and the jobworker invoices separately for the manufactured goods, the jobworker may show customer supplied goods separately and compute tax on the jobworker's value; this is an appropriate method for Central Excise and CST, and the jobworker must issue the corresponding Form F in respect of goods received on Form F.