Can merchant exporter and manufacturer - of same company ?

Case

A company has many units - all having same PAN based excise registeration number. Unit-1 is Manufacturer and it transfers the material to Unit-2 which further exports the material.

 

Query

Can they adopt the merchant exporter procedure (where UNit-1 acts as Manufacturer and Unit-2 acts as Merchant Exporter) ?

I asked an excise personnel and he told that units of a same company cannot act as manufacturer and merchant, because they are a part of same company. But my opinion is that excise treat all units as different entity and hence it should be permissible.

Please let me know the correct facts, along with exact referance to the statute. (Expert Knowledge required)

Replies (6)

Unit-1 can transfer the excisable goods with payment of duty to unit-2 and will take the cenvat credit on the basis of invoice issue by unit-1. Unit-2 will export the goods under rule 18 or 19 of central excise rules 2002. 

Sir firstly thanks for the reply.

I know that he can take the route of Rule 18 and 19.

But my question was that whether he can use merchant exporter route with units of same company ?

You can purchase the goods without payment of duty under rule 19 of central excise rules 2002 as an merchant cum manufacturer but it will be complecated.  

Sir I know that is complicated , thats why I raised the query for an experrt opinion.

Pls guide the source to be referred.

Dear Mr. Natesh,

Yes, It is possible . Unit 2 act as a merchant exporter.  Unit 2 will purchase the goods from unit 1 under CT-1 certificate without payment of duty and depached from its premises.

Regards

RP Ananthakumar

Sir Thanks for the reply.

I am also of the same opinion but my seniors are not convinced.

Can you please let me know where can I refer for an evident source of information.

I mean please tell me the Rule/Section where this can be found.

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