Hi Swagat,
Not sure about the batch neutral transfer order however as far as standard TO creation are concern system first check material master and the storage type search strategy and then any other parameter.
1) system first look at the material master WM1 view, picks the value of stock removal
2) Pass the value to storage type search and find the corresponding entry from LE--WM---Strtegies--storage type search,---Determin search sequence (check whether storage type search entry exist for the selected Removal indicator and movement type if any reference is defined in WM movement type or not)
what is this batch neutral transfer order(how is this different from normal transfer order), could you please elaborate a bit more in detail