Consignment stock at Customer site

[Former Member]

Dear All,

As a part of Consignment process, while creating Consignment fill up order, stock should be moved from our Bangalore plant to customer location at Chennai.

I have the queries below.

1. During Consignment fill up, we will not bill not bill the Customer and we will be creating only Proforma invoice and Excise Invoice. As per Indian law, it is allowed to keep the stock at Customer site with Proforma and Excise invoice. i.e. Can we move our stock to Customer place after Consignment fill up?

2. Second query: While Consignment fill up, we won't bill the Customer but Excise duties are collected. Customer will be billed only during Consignment issue. As per law, is there any restriction with respect to number of days like "within this many days commercial invoice should be created"?

2. Second query: Say for an example, we create a Consignment fill up for 10 quantities. So excise duties will be collected for the 10 quantity. While creating Consignment issue, if Customer is taking only 2 quantity out of 10, we will be billing only 2 quantity. How does the CENVAT account will be settled between Commercial invoice and Excise invoice? How this will be handled?

Regards,

Raja Durai

[Lakshmipathi · Accepted solution]

To answer your first query, yes the purpose of doing consignment fill up is to make subsequent sales to a customer.

To answer your second query, since the cargo is being moved to another state, both excise duty and tax would have to be levied when consignment fill-up takes place.  I think, for tax, E1 & E2 tax structure will come into picture.  You have to check with your client on this part, as I am not sure on this.  Also, there is no restriction in keeping the duty paid stock in warehouse.

Coming to your last query on accounting excise amount, I think, you can check Customer Payable account for which there are couple of standard tcodes which includes J2IUN.

G. Lakshmipathi

[phanikumar_v3]

I Dont want to differ with Experts opinion.

But still--" In consignment Fill up--there will not be any Sales tax collected.

(if you follow KB-LF-F8)

Once you are billing based on proforma--how come you can make the payment(in form of sales tax-JCST/JLST)--Because Proforma will not hit accounting entries.

(if business paid this Sales tax amount during Fill up-In Which GL this amount will be updated)

The purpose of Creating Proforma, is to create Excise invoice only..

at the time of Consignment issue(KE-LF--F2)

Here at this junction we will create commercial invoice along with sales Tax then we can carry these Excise and Sales Tax amounts to respective GLs and paid accordingly in later times.

Experts correct me if i am wrong.

Phanikumar

[Former Member]

HI

• Consignment goods are goods which are stored at the customer location     but which are owned by your company. The customer is not obliged to pay for these goods until they remove them from consignment stock. Otherwise, the customer can usually return consignment goods which are not required.
• Consignment issue enables the customer to take consignment goods from the special stock for their use or to sell.
• Consignment issue involves removing the goods from the special stock and making it the property of the customer.
• When the customer removes consignment stock to use or sell, you record the transaction in the system by creating a consignment issue order.
• This time we Rise Invoice to our customer. (i think there is no restrictions).
• A business document, in India, that you prepare when you issue excisable goods from a manufacturing plant, for example:

              To be sold to a customer 

              To be transferred to another of your plants

          The excise invoice lists the goods that you have issued and States how much excise duty               applies. Your customer uses the excise invoice to claim back the excise that it has paid                   from the excise authorities.

sreenivas

[Lakshmipathi]

sreenivas reddy

Please dont copy paste from other source which is strictly not allowed here.  You have copy pasted from standard documentation which is against the forum rules.  Being a new member of the forum, I am cautioning you to adhere to forum rules.

G. Lakshmipathi

[Lakshmipathi]

Phanikumar V

 In consignment Fill up--there will not be any Sales tax collected

For that, the delivering plant's name and receiving dealer's name should be same which is possible only if there is a plant.  Otherwise, my earlier comments holds good which means, E-1 tax is applicable.

G. Lakshmipathi

[phanikumar_v3]

Sir--Thanks for the Clarification given.

But--still i am unable to catch you sir.

For suppose Business(example-B) sends the consignment goods from its plant (Example-BP1) to its customers location(Customer Example-C) through consignment fillup.

Will it attracts Sales Tax?

Also sorry sir-that i have not caught your point of delivering plant name and receiving dealers name also what is E1 Tax sir?

Phanikumar

[phanikumar_v3]

Firstly thanks for your patience in helping me sir through direct message.

But--still i am unable to catch you sir.

For suppose Business(example-B) sends the consignment goods from its plant (Example-BP1) to its customers location(Customer Example-C) through consignment fillup.

Will it attracts Sales Tax?

Also sorry sir-that i have not caught your point of delivering plant name and receiving dealers name also

what is E1 Tax sir?

Phanikumar

[Former Member]

Any suggestions please.