Excise applicability on pulverization of sugar

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uttam (Querist)
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02 March 2016 Whether pulverization of sugar amounts to manufacture?
One dealer who is purchasing sugar from manufacturer who is charging excise duty and cess on his sales bill..and dealer is pulverising sugar and packing in the size of 50 and 100kg packs under its own brand and then selling it to other party who's using the same for making cookies and confectionery.
If we want to passed on the excise whether he needs to take registration as a first stage dealer?
And if he is taking registration as a manufacturer then what will be the rate of duty on pulverised sugar..
Please suggest..

uttam

uttam (Querist)
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02 March 2016 can any one please revert on this

Asha Kanta Sharma online

Asha Kanta Sharma online

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21 July 2024 In the context of excise duty applicability on the pulverization of sugar in India, here are the key points to consider:

### 1. Manufacture under Excise Law

Under the Central Excise Act, 1944, "manufacture" is defined broadly to include any process:

- **Transformation**: Which results in a different commodity having a distinct name, character, or use.
- **New and distinct product**: Emerging with a different commercial identity.

### 2. Pulverization of Sugar

Pulverization, which involves crushing or grinding sugar into finer particles or different sizes, generally does not amount to "manufacture" under excise law. This is because:

- **No New Commodity**: The process of pulverization typically does not create a new or distinct commodity from sugar. It remains sugar, albeit in a different physical form (finer particles or different sizes).

### 3. Excise Duty Implications

- **Dealer's Role**: If a dealer purchases sugar already subject to excise duty and subsequently pulverizes and packs it under their own brand, they are typically not required to pay excise duty again on the pulverized sugar.

- **First Stage Dealer**: If the dealer wishes to pass on the benefit of excise duty paid on the purchase of sugar, they can do so as a first stage dealer. Registration as a first stage dealer is required for this purpose.

- **Manufacturer's Registration**: If the dealer chooses to register as a manufacturer (not typically required for pulverization of sugar unless it significantly changes the character of the product), they must comply with excise duty provisions applicable to sugar. However, as mentioned, pulverization itself may not attract excise duty.

### 4. Rate of Excise Duty

- **Specific to Sugar**: If excise duty were applicable (e.g., on manufacturing sugar products like candy or confectionery), the rate would depend on the specific classification under the Central Excise Tariff Act. However, pulverization itself does not usually attract excise duty.

### Conclusion

In conclusion, pulverization of sugar generally does not amount to manufacture under excise law because it does not result in a new commodity. Therefore, excise duty is not typically applicable on the process of pulverization. The dealer can pass on the excise duty paid on the purchase of sugar if registered as a first stage dealer, without the need for manufacturer registration unless the activity changes the character of the product significantly.

For specific cases or detailed advice, consulting with a qualified tax professional or GST practitioner familiar with excise laws would be advisable to ensure compliance and proper understanding of regulatory requirements.

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