E-Way Bill Requirements For Transport Of Goods In Knocked Down Condition (CKD or SKD)
When generating an e-way bill, the transaction type must be either “outward supplies” or “inward supplies”. If the transaction is for “outward supplies,” a sub-type must be selected amongst the several choices as below:
- Supply
- Exports
- Job Work
- SKD/CKD/Lots
- Recipient Not Known
- For Own Use
- Exhibition or Fairs
- Line Sales; or
- Others
In this article, we will understand the e-way bill requirements for transporting goods in SKD or CKD conditions.
Let’s start by understanding what CKD/SKD means in more detail:
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What are Semi Knocked Down or Completely Knocked Down (SKD/CKD) Goods?
Often, the goods that need to be transported from one place to another are so large in size that it becomes logistically and financially impractical to transport them as a single product that is ready to be used. Such goods are often transported in a semi-knocked down or completely knocked down state.
Both Semi Knocked Down (SKD) and Completely Knocked Down (CKD) are terms used to describe the extent to which a product that is being transported has already been assembled before it reaches the recipient.
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Semi Knocked Down Goods are partially assembled products that require some assembly work to be done by the recipient. Some of the assembly work has been done at the origin point, but some still remains to be done. Products which require some, but not complete assembly at the destination point are referred to as Semi-Knocked Down Goods.
Completely Knocked Down Goods are basically individual components of a product that are shipped together, but must be fully assembled at the destination by the recipient in order to get the product working as intended.
Transporting goods in SKD or CKD conditions is quite common in industries like automotive, machine manufacturing, infrastructure or furniture. Since the final products of these industries are often large sized, they are broken down into smaller components before transport, and often use multiple vehicles for transport.
For example, if you have ordered any large furniture, like a dining table or a sofa, you would have noticed that often, the product does not arrive in a ready to use condition. The installation is done separately by a person sent by the seller, usually a day or two after the product arrives. The installation process is basically the assembly process.
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Where Are CKD/SKD Goods Commonly Used?
CKD (Completely Knocked Down) and SKD (Semi Knocked Down) goods refer to products that are shipped in parts and assembled at the destination. These formats are widely used in industries where transportation of fully assembled goods is costly, impractical, or subject to import restrictions.
Common industries using CKD/SKD goods include:
- Automobile Industry: Car and two-wheeler manufacturers import CKD/SKD kits for local assembly to save on logistics and customs duties.
- Electronics: TVs, washing machines, and air conditioners are often brought in as SKD kits to be assembled locally.
- Heavy Machinery & Equipment: Industrial machines are shipped in CKD form for easier handling and installation at client sites.
- Furniture & Modular Fixtures: Items like modular wardrobes and office desks are transported disassembled (CKD) to reduce damage during transit.
Using CKD/SKD formats helps businesses save on costs and meet local regulatory requirements, especially in global trade contexts.
E-way bill requirement for SKD/CKD
The supplier must adhere to the following procedure for moving goods in SKD or CKD condition.
- Create a single invoice for the supply of the goods, even if they are transported using various vehicles.
- Raise a delivery challan referencing the invoice number for each vehicle (same for all the delivery challans).
- Each vehicle shall be equipped with a delivery challan and a certified copy of the invoice.
- Every delivery challan created for a different vehicle must generate an e-way bill.
- The original invoice must be delivered with the final shipment.
Procedure for Generation of E-Way Bill
Step 1: Access the e-way bill portal.
Step 2: Click on “e-way bill”, and from the drop-down menu, select “Generate New”
Step 3: Choose the “Outward” transaction type and the “SKD/CKD” subtype.
To generate the e-way bills against each delivery challan, update the Delivery Challan Details and finish Parts A and B.
Circumstances and industries where CKS/SKD transactions are prevalent
CKD (Completely Knocked Down) and SKD (Semi-Knocked Down) transactions are widely used in industries such as automotive, electronics, and heavy machinery manufacturing. These transactions involve importing goods in parts or components rather than as fully assembled units. One common reason for adopting CKD/SKD arrangements is to reduce import duties and tariffs, as many countries offer favorable rates for unassembled components to encourage local assembly and manufacturing. This method also allows businesses to meet regulatory requirements that mandate a certain level of local content in products, boosting domestic employment and industry growth.
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In the automotive industry, for example, CKD and SKD are extensively used by companies expanding into new markets. By shipping vehicles in parts and assembling them locally, they avoid hefty import fees and can offer competitive pricing. Electronics manufacturers use these transactions similarly, shipping components to be assembled in regional facilities to streamline logistics and cater to market demands. Heavy equipment and machinery companies may also rely on CKD/SKD transactions to deliver large, complex equipment in parts, making transportation easier and allowing for customization based on the market. CKD/SKD transactions help reduce costs, comply with regulations, and support local economies.
Important Guidelines for Businesses
If your business deals with CKD or SKD goods, it’s essential to follow proper GST and logistics compliance:
- Proper Classification: Ensure the right classification and valuation of CKD/SKD goods for GST and customs purposes.
- Clear Documentation: Each consignment should include detailed invoices, packing lists, and delivery challans indicating parts supplied.
- Consistent HSN Code Use: Even if goods are shipped in parts, they should be classified under the final product’s HSN code.
- e-Way Bill Compliance: Generate an e-Way Bill for each shipment of parts, even if they are part of one complete unit.
- Assembly Site Clarity: Mention the place of assembly clearly in the invoice or delivery documents to avoid GST confusion.
- Avoid ITC mismatches: Ensure invoices for individual parts are properly recorded for Input Tax Credit.
Following these guidelines helps prevent tax disputes and ensures smooth operations when dealing with CKD or SKD goods.
Conclusion
Products often need to be transported in smaller parts and in multiple vehicles for logistical reasons. But generating a separate e-way bill for each vehicle can get tedious. But at the same time, GST laws make it mandatory to carry an e-way bill for each vehicle. Using an Auto e-way bill software that can generate e-way bills automatically in just a few clicks will save you a lot of time and effort when transporting goods in CKD or SKD conditions.
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I am a chartered accountant with over 14 years of experience. I understand income tax, GST, and balancing financial records. I analyze financial statements and tax codes effectively. However, I also have a passion for writing, which is different from working with numbers. Recently, I started writing articles and blog posts. My goal is to make finance easier for everyday people to understand.
Frequently Asked Questions
- What are knock-down goods in the context of e-way bills?In e-way bills, knock-down goods refer to Completely Knocked-down (CKD) and Semi-Knocked-down (SKD) goods. These goods are shipped in parts and assembled at the destination.
- Is an e-way bill required for knock-down goods?Yes, an e-way bill is required for knock-down goods. Whether Completely Knocked Down (CKD) or Semi Knocked Down (SKD), the e-way bill ensures compliance with GST regulations during transportation.
- How do you generate an e-way bill for CKD goods?To generate an e-way bill for CKD goods, log into the GST portal, provide consignment details, including the description, quantity, value, and transporter information, and follow the usual process for e-way bill creation.
- What details are necessary for an e-way bill for SKD goods?For an e-way bill for SKD goods, you must include details such as the sender and recipient’s GSTIN, a detailed description of the goods, the number of parts being transported, their value, and the transporter’s details.
- Are there special considerations for creating an e-way bill for knock-down goods?When creating an e-way bill for knock-down goods, it’s essential to accurately describe the transported parts and ensure that each consignment’s value and quantity are correctly entered to avoid discrepancies.
- How is the e-way bill for CKD goods different from regular goods?The e-way bill for CKD goods requires detailed descriptions of each part being transported rather than a single finished product, which helps track and ensures compliance during the assembly process at the destination.
- What challenges might arise with e-way bills for SKD goods?Challenges with e-way bills for SKD goods include ensuring accurate part descriptions, managing multiple consignments if the goods are transported in phases, and maintaining proper documentation for each shipment.
- Can multiple e-way bills be generated for a single consignment of knock-down goods?Yes, multiple e-way bills can be generated if the consignment of knock-down goods is shipped in various batches. Each batch will require an e-way bill detailing the parts transported in that shipment.
- What is the validity period for an e way bill for CKD and SKD goods?The validity period for an e-way bill for CKD and SKD goods depends on the distance to be covered. Typically, one day is allowed for every 200 kilometres or part thereof, similar to other goods.
- Where can I find guidelines for creating an e-way bill for knock-down goods?The official GST portal and related government publications provide guidelines for creating an e-way bill for knock-down goods. These resources provide detailed instructions and ensure compliance with GST regulations.
