I am little bit confused about the VPNID and Route Target... it looks like both are doing the same function so when we need VPNID and when we need RT?
You got it right, VPNID has nothing to do with routes exchange. all VRF;s belonging to a VPN should be assigned the same VPNID. So the VPNID is essentially used to isolate data and control traffic virtually.
Mohammed, its ok, happens all the time :-).