Inter unit matl movement - BED pmt reg, Central Excise

[venkat eswaran]

Dear All,

We are 2 mfg unit, clearance is MRP based product. one is main and another is branch. All goods are sold to customer from main unit only. Goods manufactured in branch coming to the main unit as finished and semi-finished and sold to customers from main unit only.

While removing goods from branch to main unit we are paying duty on MRP rate finished goods.? Is it ok? Or we need to pay 110% cost of goods for all items? MRP based duty is only for customers?

Is there any provision without pmt duty for inter unit transactions?

Pl provide ur valuable replies

Thanks in advance

Venkat

Posts / Replies

[Rajagopalan Ranganathan]

Sir,

If the products manufactured at branch is complete in all respect and MRP is fixed on the package there itself then the branch will pay duty on the value calculated under Section 4A of Central Excise Act, 1944 which is prevailing at the main unit at the time and date of clearance from the branch office.

If the excisable goods manufactured in the branch are sent to main unit where the goods are subjected to further processing and packed and MRP is affixed, then the branch is to clear the excisable goods under rule 8 of Valuation Rules, that is 110% of cost production which is based on CAS-4 certificate issued by a Cost Accountant.

There is no provision under Central Excise Act, 1944 to clear manufactured excisable goods without payment of duty unless such goods are unconditionally exempted by appropriate Notification issued by the Government under Section 5A of Central Excise Act, 1944. Similarly excisable goods meant for export may be cleared without payment of duty under bond/Letter of Undertaking.

[Ganeshan Kalyani]

I agree with the views submitted by Sri Rajagopalan Sir. It enriched my knowledge. Thanks.

[KASTURI SETHI]

I also concur with the excellent reply of Sh.Rajagopalan Ranganathan, Sir. My doubts also stand cleared now. Thanks a lot, Sir.

[surya narayana]

Dear Friend,

The views expressed by our learned friends are correct .

To put it in simple way,

If the products under clearance from Branch main unit or vice versa, finished goods covered under MRP, the duty to be paid on the value of MRP-Abatement

If the products are not finished, you have to pay duty on the value of 110% of the production cost based on CAS4

Further, there is no exemption from payment of duty on the inter-unit clearances unless the products are exempted

Best Regards

Suryanarayana

[CS SANJAY MALHOTRA]

Agreed with Sh. Rajagopalan ji, no need for mention of phrase highlighted in Red as put the things differently for Valuation.

If the products manufactured at branch is complete in all respect and MRP is fixed on the package there itself then the branch will pay duty on the value calculated under Section 4A of Central Excise Act, 1944 which is prevailing at the main unit at the time and date of clearance from the branch office.

[KASTURI SETHI]

SH.CS SANJAY MALHOTRA Ji,

Thanks Sir for throwing more light on the issue.