Manufacturer engaged into trading of goods

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CA Pankaj (Querist)

27 April 2010 Dear,

If a manufacturer do trading(not manufacturing) of any article other than mentioned in registration of certificate, is he is liable to issue an excisable invoice and pay excise on that particular article before removal of that article from factory.

What are the rules if manufacturer also do trading of goods.

Pl help on this.

regds

SANJAY JAIN

SANJAY JAIN (Expert)

27 April 2010 The basic facts regarding Excise, the Director of Publicity and Public Relation in its clarification vide question no. 5 explained that if manufacturer engages in trading activity, then he is required to get separate registration as TRADER and by doing so, he can pass on the CENVAT CREDIT amount to the buyer.

In case the trading of identical goods, the Commissioner’s permission is required.
For further query, feel free to write sanjayinfbd@yahoo.com (M-09350048731) or visit, HNO. 2489/8,Faridabad(Haryana).

CA Pankaj

CA Pankaj (Querist)

29 April 2010 Thanks sanjay for your reply..

In our case specific issue is that manufacturer is not in regular trading. He had purchased some excisable article from SSI (that SSI's turnover was not taxable). Those article were never used and Now manufactuere wishes to sell it off as such. Whether they are required to issue taxable invoice and to pay excise duty on that article?

Pl suggest

SANJAY JAIN

SANJAY JAIN (Expert)

29 April 2010 Dear Pankaj,

As you stated that it is not regular but occasional, so considering the facts there may be two options depending upon the facts and circumstances known to you.

In case the raw material is of such nature which may be input for manufacturer, then as such removal shall be governed by the CENVAT Credit Rules,2004 in which the manufacturer is required to reverse equal CENVAT Credit amount on the as such removal. But here as no credit has been taken as procured from SSI unit enjoying exemption, then no CENVAT credit amount is reversible. Though as abundant precaution, the excise invoice is to be prepared mentioning the fact.

In another situation, where the goods can not be held as input, then for regular trading purpose only recourse is to take trader registration for passing on CENVAT credit amount. But where the passing on CENVAT Credit amount is not involved, then it is advisable to prepare the excise invoice and mention the fact to the effect that removal of non-excisable goods as such without availing CENVAT credit.

Rajeev Kumar Garg

Rajeev Kumar Garg (Expert)

18 July 2014 SIR,
IF A MANUFACTURER PROCURE THEIR FINAL PRODUCTS FROM AN OTHER MANUFACTURER (BEING AN AREA BASED EXEMPTED UNIT)WITHOUT PAYMENT OF DUTY AND SALE THE SAME GOODS TO THEIR BUYER ON THEIR SAME EXCISE INVOICE MENTIONING THAT "AS SUCH REMOVAL OF NON CENVATABLE GOODS WITHOUT PAYMENT OF DUTY."
IN THIS CASE, WHETHER THEY NEED A SEPARATE REGISTRATION IN THE CAPACITY OF TRADING ACTIVITY FROM THE SAME MANUFACTURING UNIT OR THEY DO NOT NEED IT OR THEY NEED TO FOLLOW ANY OTHER PROCEDURE.

YOUR QUICK RESPONSE IS REQUIRED.
THANKS
R.K. GARG

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