Consignment sales by a manufacturing compnay

This query is : Resolved

Deepak (Querist)
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23 August 2015 Dear Sir,
Ours is Andhra Pradesh based manufacturing firm registered with central excise and VAT department. We are manufacturing some chemicals and paying excise plus CST/ VAT.

Now we are able to source same chemicals ( finished product ) at lesser price ( lesser than our cost of production) from Delhi. We wish to buy finished product on consignment sales basis from Delhi and issue the CST form "F" to Delhi suppliers, so that no CST is levied. We wish to sell in Andhra against VAT. We understand that we have to issue our sales details to our Delhi based suppliers.

Delhi supplier will pay excise and we wish to avail excise input. Is it permitted under Excise laws. We wish to do both activities production and trading/ consignment sales.

Arun Kumar Singh

Arun Kumar Singh (Expert)
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25 August 2015 You can do the trading and manufacturing activity but premises should be separate. You can not take the cenvat credit on goods purchase for trading activity.

Deepak

Deepak (Querist)
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26 August 2015 Dear Arun Singh,
Thanks a lot.

You have mentioned that we cannot take CENVAT credit on goods purchased for trading activity. If we buy from a manufacturer and sell to another manufacturer. and our role is that of a consignement agent then will buyer pay excise two times ? I have some doubt. Can you please recheck ?

Arun Kumar Singh

Arun Kumar Singh (Expert)
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26 August 2015 The duty will not be paid two times. you should consult with any professional.

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