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Apr
17
2015

TransitSaleDealerRegistrationisnotmandatory
ArticleID66649|PostedInExciseDuty|Articles,Featured|11Comments
THE Central Government has issued Notification No.
08/2015CE(NT) dated 01032015, which is effective
from the date of issue, has inter alia, inserted the
following 3rd proviso in Rule 11(2) of Central Excise
Rules,2002(CER,2002)
Provided also that if the goods are directly sent to any
person on the direction of the registered dealer, the
invoice shall also contain the details of the registered
dealerasthebuyerandthepersonastheconsignee,and
thatpersonshalltakeCENVATcreditonthebasisofthe
registereddealersinvoice
Ithascreatedalotofconfusionandworryinthemindsof
those manufacturers and dealers who receive goods
directly, as consignee, from manufacturer through
unregistereddealer(asbuyer)andavailcenvatcreditonthestrengthofinvoiceofsuppliermanufacturer.The

proviso has also perplexed a large number of unregistered dealers who are being advised! instructed by their
customersandotherstoobtaincentralexcisedealerRegistrationiftheywishtovalidlypassonthecenvatcredit
to customers. They are wondering why they are being forced to take mandatory registration when the same
wouldbecomeredundantverysoonaftertheimplementationofGST,whichtheGovernmenthascommittedto
bringfrom01042016.
Inmyview,theamendmenthasbeenmadetofacilitatetradeandindustryinviewofthenewpolicyofEaseof
doingBusinessasannouncedbyourPrimeMinisterShriNarendraModi.Earlier,manyregistereddealersused
tobringthegoodsintheirregisteredpremisessimplyforissuingCenvatableinvoiceincaseoftransitsale.The
amendment has facilitated such registered dealers, who need not physically bring the goods at their
godown/depot and can directly dispatch the same from the factory/depot of the supplier manufacturer. This
facility,whichseemstobegiventotheregistereddealerstoreduceunnecessarytransportationcost,cannotbe
interpreted to mean that purchase through unregistered dealer is not permitted. Also, the manufacturer or
provider of output service receiving goods directly as consignee from supplier manufacturer though
unregistereddealercancontinuetoavailcenvatcreditoninputsasearlier.Thereasonsformysaidviewareas
below:
1.TheamendmentisabeneficialprovisiongiventoFirstStagedealerandSecondStagedealer.Rule9(1)of
CenvatCreditRules,2004(CCR)prescribestheeligibledocumentsonthebasisofwhichcenvatcreditcanbe
availedbymanufacturerorproviderofoutputservice.Oneofthemanyeligibledocumentstheinvoiceissued
by manufacturer. Rule 9(2) ibid provides that the document (i.e. invoice in our case) should contain all the
particularsasperCER,2002.
2.Rule11(1)ofCER,2002providesthatnoexcisablegoodsshallberemovedfromafactoryorawarehouse
exceptunderaninvoicesignedbytheownerofthefactoryorhisauthorizedagent.Rule11(2)ibidspecifiesthe
particularsthatmustbecontainedinanycenvatableinvoice.Therelevantportionisextractedbelow:
(2) The invoice shall be serially numbered and shall contain the registration number, address of the
concerned Central Excise, name ofthe consignee, description, classification, time and date of removal,
modeoftransportandvehicleregistrationnumber,rateofduty,quantityandvalue,ofgoodsandtheduty
payablethereon.
Providedalsothatifthegoodsaredirectlysenttoanypersononthedirectionoftheregistereddealer,the
invoiceshallalsocontainthedetailsoftheregistereddealerasthebuyerandthepersonastheconsignee,
andthatpersonshalltakeCENVATcreditonthebasisoftheregistereddealersinvoice
3.Itisclearfromplainreadingthatthenameoftheconsigneemustbementionedinthecenvatableinvoiceand
so the consignee is the person entitled to avail cenvat credit and not the buyer of goods. To provide an
exemption to this rule, the 3rd proviso has been inserted to provide that in case of transit sale, the details of
registereddealerasbuyershouldalsobementionedinthecenvatableinvoice.
4.Theprovisoisveryspecificandhaslimitedapplicationonlyforregistereddealers.Ifanunregistereddealer
isdoingtransitsale,hecancontinuetoissuecommercialinvoiceasearlier,astheprovisoisapplicableonly
whenthegoodsaresenttoanypersononthedirectionoftheregistereddealer,whichheisnot.
5.Incaseoftransitsale/E1salewherethebuyerisanunregistereddealer,thecustomer/endusercancontinueto
availcenvatcreditonthebasisofsuppliermanufacturersinvoice,asearlier,iftheinvoicecontainsitsnameas
consigneeasprovidedinthesubrule2.Themanufacturersinvoiceshowingrecipientnameasconsigneeisalso
avaliddocumentforCenvatashasbeenclarifiedinCircularNo96/7/95CXdated13021995.Theearlier
procedureandlawisstillvalid.
6.Inadditiontotheconsignee,theCentralGovernmentintendedtoallowbuyertotakecreditbysending
materialsdirectlytoconsignee.Hencethenewlyinserted3rdprovisotoRule11(2)ofCER,2002hasprovided
anadditionalmethodforavailingcenvatcredittoBUYER,whoshouldbeaREGISTEREDDEALER.The

HonbleRajasthanHighCourthadruledthatmerelyprovidinganalternativemethodoradditionalmethodfor
availing Cenvat Credit does not take away the entitlement to avail Cenvat credit on the basis of original
documentandthejudgementhasalsobeenrecentlyfollowedbyHonbleGujaratHighCourt.
Further,inmyview,thelastlineinthe3rdproviso,whichsays andthatpersonshalltakeCENVATcrediton
thebasisoftheregistereddealersinvoiceseemstobeultravirestheCentralExciseAct,1944ortherules
thereunderandifchallenged,maybestruckdownbythejudiciary.Inmyview,ifanytrader,whetherregistered
dealer or not, instruct his supplier to directly dispatch the excisable goods to the consignee, without first
physicallybringingthegoodsinhisgodown/depot,thensuchtradercannotissuevalidcenvatableinvoiceeven
when he is a registered dealer. In view of the various issues involved, the Central Government should
immediatelyissuenecessaryamendmentorclarificationtobringcertaintyandpeaceofmindtothetradeand
industry.
***

Author:ManojAgarwal
Address:GanpatiCampus,LalBuildingRoad,Rourkela769012
Contact:+919937041788
E:mail:ServiceTaxExpert@yahoo.com
ReadOtherArticlesofManojAgarwal

Tags:ManojAgarwal

11thoughtsonTransitSaleDealerRegistrationisnotmandatory
1. VimalAnandansays:
12/15/2015at3:59PM

ThedepartmentclarifiedthisaspectvidetheirnotificationnumberCircularNo.1003/10/2015CXDated
05.05.2015theexistingpracticewillnotbemodifiedbythenotificationofMarch2015..
Sourcecbec.gov.in/htdocscbec/excise/cxcirculars/cxcirculars2015/circ10032015cx
Reply
2. BajrangSharmasays:
09/07/2015at9:04PM
Thanksforthesame,itsindeedagoodarticleandusefulinformationforthosewhoareintosuch
transactions.
Reply
3. ApurvaGandhisays:
06/08/2015at2:41PM
DearSir,
Wearenotregistereddealerofexcise.
Nowwewanttobuyexcisablematerialfromexciseregisterdealer(notasmanufacturerbuttraderwith
exciseregistration),
Wealsowanttopassexcisebenefittoourcustomer.
Inthiscasedoesthedealermakebillwithbuyerasournameandconsigneeascustomer??canour
customergetbenefitofexcise.??
Reply
4. Rajesh,Mumbaisays:
05/09/2015at6:20PM
Manojji,
YouwererightinyourinterpretationthoughwholetradeandindustryandevenMumbaicommissioner
andofficialsindelhicouldnotunderstandandwereconfused.
pleasecontinuepostingyoursuggestions.
Reply
5. ManojAgarwalsays:
05/06/2015at2:05PM
GoodNewsforManufacturersandTraders.CBECissuesCircularNo.1003/10/2015CXdated0505
2015toclarifythatitisnotmandatoryforregistered/unregistereddealertoissuecenvatableinvoicein
thecaseoftransitsale.Theconsigneecanstilltakecenvatonthebasisofmanufacturersinvoice.Further,
clarificationisinrespectof3rdprovisoofrule11(2)ofCentralExciseRules,2002isthatRegistrationof
Unregisteredtradersnotmandatory,asearlier.
Asmentionedbymeinmyarticle,theclarificationalsosaysthatthenewprovisosaremeanttoimprove
theEASEOFDOINGBUSINESSbyprovidinganADDITIONALFACILITYtotheregistered
dealer.
Reply
6. PRATEEKAGARWALsays:
04/30/2015at3:25PM

DearSir,
IreallyappreciateyourarticleonrecentCentralExciseNotification8/2015,N.T.
Asyouknowthatthisnotificationhasbringswithitselflotsofconfusionsinthemindofallthetradersin
thebusinessassociation&alsointhemindofprofessionalstoo,asbecauseatonesidethisnotification
bindstheregistereddealerstoissuecenvatableInvoiceasabuyerbyaddingprovisotoCER,2002buton
theothersideCCR,2004aresilentonthismatter.
Consideringallthesituationsandpracticalitiestraders(i.e.incasewhentheyarethebuyers)tobeonsafe
sidealreadystartedtoraiseexciseinvoiceinbuyerconsigneetransactionsandtransit/E1salesfrom1st
ofApril,2015.But,nowtheproblemisthatwhatwillbethesolutionforMarch2015transactions,ashow
itwillbepossiblefortraders(i.e.asbuyer)toraisedexcisebillsforthemonthofMarch,2015asthis
notificationiseffectivefrom01.03.2015,buthascometobenoticeofallthetradersandmanufactureson
andaround1stweekofApril,2015.
NowthesituationisthatthereisnoclarificationbyGovernmentonthismattertillyet,buttheconsignees
whoarealsotheultimateconsumersofgoodstobeonsafesidestarteddemandingExciseInvoicefrom
thebuyersendforthemonthofMarch15also,sothatdepartmentwillnotdisallowedthereInputCredits
ofExciseduty.But,howthiswillbepossibleforthebuyertoraisedInvoiceforthemonthofMarch15
astheyhavealreadyclosedtheirbooksfortheF.Y:20142015andalsohasfiledtheExciseReturnforthe
same.
Tobeatrader,iamalsointhissituationandhavenosolutionsforsuchcasethathowtoraisedExcise
InvoiceforthemonthofMarch2015,asihasalsoclosedmybooksfortheF.Y:201415andhasalso
filedtheExciseReturnforthesame.So,itwillbeagreathelpinghandsfromyoursideifyouwillwright
somearticleonthismatterofhowtosolvetheMarch,2015ExciseInvoicingpracticalproblems
insteadofputtingfactsonthelawsprovisionsonlyandnotonthepracticalaspectsofits.
Hopeyouwillappreciatemyreplyandsurelywillthrowsomelightonthesepracticalissues.
Thankingyou,
PRATEEKAGARWAL
Mob:+919438090901
Rourkela(Odisha)
Reply
7. VinayakaElectrixsays:
04/25/2015at1:30PM
DearSir,
Iamtradernotregisteredwithcentralexcise.Ipurchasethegoodsfromthedealers(both1ststageand
2ndstagedealer)andsupplythesametomycustomers.HeretoIwasissuingmyinvoicealongwiththe
gatepassofthedealers(1ststage&2ndstage).
Idonothaveagodownasisupplythegoodsdirectlyfromthedealersgodowntomycusotmersandthe
goodsdoesnotcometomypremises.
Asperthepresentnotification,acoupleofmycostumershaveadvisedmetogetmyselfregisteredwith
thecentralexcise.Ispoketoacoupleofexciseconsultants,whoopinedthatIhavetogetmyself
registeredwiththeExcisedepartmentandalsoshouldhaveagodown.
Pleaseadvisemehowtogoaboutandisitnecessaryformetogetmyselfregisteredwithcentralexcise,
whichfranklyspeakingIcannotaffordasIhavetohireagodownandappointamexciseconsultant.
Pleaseadvise.
Reply

8. CMAASIMSAHAsays:
04/19/2015at11:21PM
IthinkdistinctionbetweenRegistereddealerandconsigneeisrequired.InplainreadingConsigneemeans
whowillreceivethegoods.IftheconsigneeisunregisteredeitherwithCentralexciseorinstateVAT/
CSTthenhowhecangettheCenvatcreditorinputcreditasperVATActoftherespectiveVATACT
Providedalsothatifthegoodsaredirectlysenttoanypersononthedirectionoftheregistereddealer,
theinvoiceshallalsocontainthedetailsoftheregistereddealerasthebuyerandthepersonasthe
consignee,andthatpersonshalltakeCENVATcreditonthebasisoftheregistereddealersinvoice
Theamendmentissilentabouttheultimate/endconsumer.Theregistereddealerherecannotbebuyer
butsimplyatraderonly
asah456
Reply
9. manishsays:
04/18/2015at7:29PM
Ioverlookedthewordregddealerandagreethatsaidprovisohaslimitedextent.goodgoodarticle.
thankyouverymuch
Reply
10. KalikantMishrasays:
04/18/2015at12:33PM
DearSir,
Asdiscussed,pleaseinformusdutyofHSNcodeis84463011(ProductNameWeavingMachine
Automatic)underRRtuff.
Requestingtoyoupleasedotheneedfulonurgentbasis.
Awaitingforyourreply.
Thanks&Regards.
Reply
11. v.rmadosssays:
04/18/2015at11:52AM
DearSir
Itisnicetohaveyourcomments.kindlyletushaveyourcommentsonthefollowingpoint.
Mfrstofirstpointdealerandthenthesecondpointdealercangetitemsinmodvatinvoicefromfirstpoint
dealerandtakeinputandpassonexcisebenefitstoendusers.Isitpossibleinordertohaveendusers
landingcostwillbereducedandseconddealerbecomecompetitive.Isitpossibletheseconddealercan
passonmodvatinvoicetoenduser.?
Reply

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