Central excise dealer query

I am confused at following transaction.  Require your guidance.

Company A is a manufacturer who supplies Raw material to company B, also a manufacturer. 
Company B sends some raw material to the jobworker’s premises directly from company A [Rule 4(5)(a)] and takes cenvat credit only after the material received in its premises after jobwork. This is to save the transportation cost.  The jobwork process may/may not amounts to manufacture.

Now as some business strategy this arrangement is changed as under.
- Company A will supply raw material to company X “An Excise Registered Dealer”.
- Company “X” will then supply this material to company “B” on its Dealer Invoice.
This is basic and routine arrangement.

But how the material can go directly from company “A” to some jobworker and then sent to company “X” a registered dealer and then it can be finally supplied to company “B”. 
Can “X”- the dealer, instruct “A” to put jobworker’s name & address as consignee and when material come after jobwork to “X”, he can enter it in its RG23D register and make invoice to company “B” ???
Is registered dealer allowed to send any material to jobworker for the process which does not amount to manufacture ??

Replies (3)
Originally posted by : vikas


I am confused at following transaction.  Require your guidance.

Company A is a manufacturer who supplies Raw material to company B, also a manufacturer. 
Company B sends some raw material to the jobworker’s premises directly from company A [Rule 4(5)(a)] and takes cenvat credit only after the material received in its premises after jobwork. This is to save the transportation cost.  The jobwork process may/may not amounts to manufacture.

- process is total wrong, B can not send the materials to any job worker on account of A, instead A has to take delivery from B's premises then shift the same to any job worker on challan of A only.

Now as some business strategy this arrangement is changed as under.
- Company A will supply raw material to company X “An Excise Registered Dealer”.
- Company “X” will then supply this material to company “B” on its Dealer Invoice.
This is basic and routine arrangement.

 

- company X is dealer or job worker? as dealer invoice is for purely depot or trader, not for job worker. a job worker has to return the goods after job work to principal on the basis of original challan received from principal.

But how the material can go directly from company “A” to some jobworker and then sent to company “X” a registered dealer and then it can be finally supplied to company “B”. 
Can “X”- the dealer, instruct “A” to put jobworker’s name & address as consignee and when material come after jobwork to “X”, he can enter it in its RG23D register and make invoice to company “B” ???

- RG23D register is meant for depot/trader, not for trader. 


Is registered dealer allowed to send any material to jobworker for the process which does not amount to manufacture ??

 

- No, he can not send it by own, but he has to show delivery to buyer, and buyer( manufacturer) only is entitled to send it to job worker.

 

Dear Sir (s),

I have a query on the Central excise registration requirements.

We have a Pvt. Ltd. company & a SSI dealing with Animal Health products.  We do not have our own manufacturing unit but get our products manufactured through a Jobworker.  These Animal feed supplements fall under Chap 2309 of the Central Excise tariff, which attracts Nil rate of duty by way of tariff exemption.

We have Form 20&21 Stock&Sale license for our premises & we procure bulk drugs from manufacturers for the purpose of exports.  About 85-90% of our turnover is from exports.  Our last FY turnover was about 3Crores & it was 100% exports turnover. 

My query is do we need to obtain a Central excise registration for trading activity as stated above if we cross 4Crores turnover this year.   We do not deal with drugs & do not take or pass on CENVAT benefit as of now.

Kindly help.

thanks & regards,

Suresh Kumar

 

@ suresh Kumar

Central Excise is applicable only on manufacturing activity, not on export or other type of trades

as mentioned by you, you are merchant trading house for bulk drugs, so 4 cr limit is not applicable for you.

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