Manufacture at customer location

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This query is : Resolved

Kuldeep Kulkarni (Querist)

23 August 2011 Dear Experts,

If a manufacturer of heavy machinery - say - heat treatment furnace (CETSH 8417000) manufactures the product at customer site. That is - the manufacturer purchases sub assemblis from vendors. He brings these sub assemblies (inputs)to his own factory and then sends to customers site. Then at customer site he actually manufactures the final product - i. e. heat treatment furnace. There is no doubt about the manufacture of the furnace. It is manufactured at customer site from these sub assemblies (inputs). My doubts are:
1. The manufacture takes place outside the manufacture's factory. It takes place at customer's factory. Customer's factory is already an excise registered factory for his own manufacture.So what about registration for the HT furnace manufacturer? Can / should he register a part of the customer's factory for his HT furnace manufacture activity?

2. The sub assemblies (inputs) will be purchased at the manufacturer's factory and then be sent to customer's factory for manufacture of final product (HT Furnace). What procedure to be followed for removal to customer's factory? Because this is not removal under Rule 4(5) (a) to job worker.

3. Can the manufacturer avail cenvat credit of the sub assemblies (inputs)? Can the department take a stand that these inputs are not used in the factory of manufacturer?

U S Sharma

U S Sharma (Expert)

23 August 2011 if all the inputs are purchased from outside and sent to final location, then what for the factory of manufacturer is meant? it do works on these inputs or not?

if there is some work done by manufacturer on inputs then such inputs are getting converted in "parts and components of HT furnace"

after such processing, the manufacturer can clear the HT furnace in "dismentaled condition, and can errect the same at client's premises.

at this process he has to clear the whole lot of goods in one go in single invoice, pay duty, avail cenvat credit on inputs.

if the goods are sent direct from purchase to the target site and manufactured only there, then for every such job, you have to obtain a separate registration for specific job value under principal registration clubbing. maintain the records location wise and submit returns location wise, then surrender the registration on completion of job.

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