Can a manufacturing company give gurantee to sister company
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
30 June 2011
A pvt ltd is approaching bank for loan and bank put a condition of corporate gurantee of its sister concern B Pvt ltd with floating charge creation in ROC, Both companies are engaged in manufacturing of same product.
In the above case, is their any restriction under excise laws for giving corporate gurrantee. As per CA of B ltd, there is some excise issue in this transaction and saidthat excise officer assumes both the units as single.
According to me, there is only contingent liability in the books of B and actual liability of A ltd. Further this is a financial transactions and excise laws should not be relevant in this case.
In the above case, is their any restriction under excise laws for giving corporate gurrantee. As per CA of B ltd, there is some excise issue in this transaction and saidthat excise officer assumes both the units as single.
According to me, there is only contingent liability in the books of B and actual liability of A ltd. Further this is a financial transactions and excise laws should not be relevant in this case.
24 July 2011
There is no such restriction in Central Excise Law
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