Contract manufacturing

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This query is : Resolved

Saurav Nayyar (Querist)

24 November 2014 We are into business of manufacturing & bottling of liquor.The liquor business comes under the state excise and policies of all the states are different.We are manufacturing products for our principle who are owner of the brands produced by us.Due to license restrictions products has to be sold at our names as the license is in our name.The whole investment is of the principle. The whole profit is transferred to their books and we only get bottling charges.
We transfer goods to other states on F FORM to a bond in ours name.Is it legal to transfer goods on F FORM ??
Plz suggest & give judgement regarding the issue..

Amol S Joglekar

Amol S Joglekar (Expert)

24 November 2014 No problem in transferring goods in F form.
See, under the concerned State Excise, what you have is to manufacture licquor.
Accordingly you are manufacturing the licquor.
But you do not own any blendings which the end user is fond of...say RC, OC and like that. And that is where it is called as CONTRACT manufacturing.
No sooner did the licquor is manufactured and bottled, you become the trustee of those saleable goods of the brand owner.
So you are legitimate in issuing F form to the person as directed by your brand owner.

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