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Trading from Manufacturing Units


Sir,

A company engaged in Manufacturing of Excisable Goods decide to Do a trading of certain goods purchased from outside.Is there any provision in Excise or Notification to do such thing?Trading & Manufacturing will be done on same premises where he has taken the Registration.

PAVAN

 

 
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Advocate- Taxation & Corporate

There is no prohibition in the excise law from doing the trading activity from the registered manufacturing premises. As there is no prohibition, the activity is allowed. Further, there is no need for any permission from the department (earlier, before 2000, there was need for permission).

The unit has to take precaution in maintaining separate records for trading and manufacturing activities, so as to explain the transaction as and when asked by the department.


Total thanks : 1 times

 
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Senior Executive- F&A


Originally posted by :Rajesh Kumar
" There is no prohibition in the excise law from doing the trading activity from the registered manufacturing premises. As there is no prohibition, the activity is allowed. Further, there is no need for any permission from the department (earlier, before 2000, there was need for permission).
The unit has to take precaution in maintaining separate records for trading and manufacturing activities, so as to explain the transaction as and when asked by the department.
"

I would also know that How it is possible the tradingh activity from manufacturing premises except mechant export. Sir Please tell me in brief .
 

Regards

Harendra S. Negi

 

 
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Advocate- Taxation & Corporate

Trading activity can be of various types. Say for example a manufacturing unit making some steel products is also trading in steel. Trding is possible also on the inputs on which cenvat credit has been taken, i.e. by removal of goods as such.

Trading can also be related to manufacturing. Say an unit making computers wants to trade in printers not manufactured by him. He can keep printers in the same premises, and if the customer wants to buy printers also, may seel printer to them.

A good example is service station of automobiles. They sell spares and also provides services. When a customer receives bill, it clearly shows the value of sold items, along with value of services on which service tax is paid. There is no provision that the manufacturer cannot sell, both manufactured and trading item on the same invoice.

If the manufacturing unit is trading in something, which is not his input or final products, there is no problem. He can have a separate series of invoices for trading item and do the trading. 


Total thanks : 2 times

 
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Also we can give example that some pharmaceuticals company are purchasing the product from other company , called 'third party parchase'.  

But here is question is that any precaution must be required at the time of storage and clearance? 

because the company are storing and clearing the Duty Examption Goods, Duty Paid Goods and Duty Payable goods at a time.

 

 
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If the traded product such as Printer in above case is Non excisable purchase. Where as Computer is manufactured product & cleared with payment of Excise duty. Can the printer be sold with NIL Excise duty ?? whether different series of Invoice required ?

Secondly if the manufacturer wants to Trade in the same items which are manufacturing also. is it allowed ?,

if such Trade purchase are non excisable purchase. whether the same would be sold without  charging excise ? Whether seperate series of Invoice is required ?

Whether seperate Primises is required or such non excisable Trading or can be executed from Manufacturing Location ?

 
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Hello Sir,

 

I had a small query. There is a manufacturing unit which purchases colour coated coils from various companies and then by processing them in a roll forming machines converts the coil in colour coated sheet and sells them after paying the required excise duty.

 

Now the company also sells colour coated coils to other companies who have such similar machine or may require the coil for some other purpose. Now my question is does the company have to levy excise duty on the profit made on such trading of coil, even though no manufacturing is being done by it. Or is it ok for the company to sell the coil without levying excise duty on the profit and just passing on the excise duty that was actually received on the purchase of such coil i.e. in a way similar to what a First stage dealer does.

Thank you for your advice in advance.

 

Regards,

Rahul Dayma

 
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Sr. Officer - Central Excise/Cash

There is no ristriction to do trading activity from manufacturing factory in excise.  You can do as per the below conditiion.

1.  You can not take cenvat credit for that goods.

2. You can not use that material in your manufacturing

3. You can create separate invoice for this trading sales

4. You can maintain separate stock area and records for this goods.

 
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sir,

we are a billet manufactring unit. we want to trade in the raw material used for manufacturing of the billets and we even want to trade in billets which is our finished goods. we want to do trading of the various product from the same place where we manufacture billets.

how can we go about doing it? do we need to take separate excise registration number?do we need to have separate premisses with a different gate and accessability ?please advice.

thanks and regards.

 
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Advocate & Consultant


Dear Mr. chhabra,

there is no prohibition in act if manufacturer wants to trade goods from his factory, all he is required to do is to maintain proper records in this regards (CCE pune-III, Trade Notice No. 67/2003 dated 9.12.2003). So, you are not required to take separate excise registration or premises for this.

 
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