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Trading from Manufacturing Units

PAVAN (SERVICE) (28 Points)

19 January 2009

Sir,

A company engaged in Manufacturing of Excisable Goods decide to Do a trading of certain goods purchased from outside.Is there any provision in Excise or Notification to do such thing?Trading & Manufacturing will be done on same premises where he has taken the Registration.

PAVAN

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29 Replies

Rajesh Kumar (Advocate- Tax) (7806 Points)
Replied 19 January 2009

There is no prohibition in the excise law from doing the trading activity from the registered manufacturing premises. As there is no prohibition, the activity is allowed. Further, there is no need for any permission from the department (earlier, before 2000, there was need for permission).

The unit has to take precaution in maintaining separate records for trading and manufacturing activities, so as to explain the transaction as and when asked by the department.

1 Like

HS Negi (Senior Executive- F&A) (590 Points)
Replied 20 January 2009

Originally posted by :Rajesh Kumar
"	There is no prohibition in the excise law from doing the trading activity from the registered manufacturing premises. As there is no prohibition, the activity is allowed. Further, there is no need for any permission from the department (earlier, before 2000, there was need for permission). The unit has to take precaution in maintaining separate records for trading and manufacturing activities, so as to explain the transaction as and when asked by the department.	"

I would also know that How it is possible the tradingh activity from manufacturing premises except mechant export. Sir Please tell me in brief .

Regards

Harendra S. Negi

Rajesh Kumar (Advocate- Tax) (7806 Points)
Replied 21 January 2009

Trading activity can be of various types. Say for example a manufacturing unit making some steel products is also trading in steel. Trding is possible also on the inputs on which cenvat credit has been taken, i.e. by removal of goods as such.

Trading can also be related to manufacturing. Say an unit making computers wants to trade in printers not manufactured by him. He can keep printers in the same premises, and if the customer wants to buy printers also, may seel printer to them.

A good example is service station of automobiles. They sell spares and also provides services. When a customer receives bill, it clearly shows the value of sold items, along with value of services on which service tax is paid. There is no provision that the manufacturer cannot sell, both manufactured and trading item on the same invoice.

If the manufacturing unit is trading in something, which is not his input or final products, there is no problem. He can have a separate series of invoices for trading item and do the trading.

2 Like

rutambh (.....) (217 Points)
Replied 25 January 2009

Also we can give example that some pharmaceuticals company are purchasing the product from other company , called 'third party parchase'.

But here is question is that any precaution must be required at the time of storage and clearance?

because the company are storing and clearing the Duty Examption Goods, Duty Paid Goods and Duty Payable goods at a time.

Jagdish Mandowara (Manager- Accounts) (23 Points)
Replied 05 March 2010

If the traded product such as Printer in above case is Non excisable purchase. Where as Computer is manufactured product & cleared with payment of Excise duty. Can the printer be sold with NIL Excise duty ?? whether different series of Invoice required ?

Secondly if the manufacturer wants to Trade in the same items which are manufacturing also. is it allowed ?,

if such Trade purchase are non excisable purchase. whether the same would be sold without charging excise ? Whether seperate series of Invoice is required ?

Whether seperate Primises is required or such non excisable Trading or can be executed from Manufacturing Location ?

Rahul Dayma (Student) (22 Points)
Replied 06 October 2010

Hello Sir,

I had a small query. There is a manufacturing unit which purchases colour coated coils from various companies and then by processing them in a roll forming machines converts the coil in colour coated sheet and sells them after paying the required excise duty.

Now the company also sells colour coated coils to other companies who have such similar machine or may require the coil for some other purpose. Now my question is does the company have to levy excise duty on the profit made on such trading of coil, even though no manufacturing is being done by it. Or is it ok for the company to sell the coil without levying excise duty on the profit and just passing on the excise duty that was actually received on the purchase of such coil i.e. in a way similar to what a First stage dealer does.

Thank you for your advice in advance.

Regards,

Rahul Dayma

R P Ananthakumar (Sr. Officer - Central Excise/Cash) (514 Points)
Replied 14 October 2010

There is no ristriction to do trading activity from manufacturing factory in excise. You can do as per the below conditiion.

1. You can not take cenvat credit for that goods.

2. You can not use that material in your manufacturing

3. You can create separate invoice for this trading sales

4. You can maintain separate stock area and records for this goods.

saurav chhabra (BUSINESS) (114 Points)
Replied 21 October 2010

sir,

we are a billet manufactring unit. we want to trade in the raw material used for manufacturing of the billets and we even want to trade in billets which is our finished goods. we want to do trading of the various product from the same place where we manufacture billets.

how can we go about doing it? do we need to take separate excise registration number?do we need to have separate premisses with a different gate and accessability ?please advice.

thanks and regards.

Prabhat Kumar (Advocate & Consultant) (1912 Points)
Replied 21 October 2010

Dear Mr. chhabra,

there is no prohibition in act if manufacturer wants to trade goods from his factory, all he is required to do is to maintain proper records in this regards (CCE pune-III, Trade Notice No. 67/2003 dated 9.12.2003). So, you are not required to take separate excise registration or premises for this.

Anuj Agrawal (Proprietor) (21 Points)
Replied 24 November 2010

Sir,

I'm a trader as of now and i recieve invoices excise charged on to them. I want to take a registration as a first stage dealer as i purchase directly from manufacturing units. I want to know wether it will be necessary for me to issue invoices and pass on excise (shown seperately) in each of them on every sale or i can issue invoice without charging excise seperately (excise included in cost in such cases) and charging VAT directly. And if it is possible, how will i have to maintain records..? Will i be required to maintain seperately registers for

"purchases" against which i am issuing sale invoice containg excise seperately and then VAT AND "purchases" against which i'm issuing invoices without showing excise and charging VAT DIRECTLY.

And also that what wud i be required to repport to excise department, all purchases against which both invoices are issued or only such purchases and sales against whic excise invoices are issued..

Please provide guidance on the same.

Jeevesh Mehta (Advocate- Corporate Commercial & Indirect Tax Advisory) (861 Points)
Replied 26 November 2010

Answering your query would be difficu;lt for people out here . You must consult a Taxation advissor for the same and discuss with him your issues and proceed further as per his opinion.

Regards

Jeevesh Mehta

9811617186

1 Like

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 04 December 2010

DEALERS

The Central Government has made it possible for manufacturer of excisable goods to avail MODVAT (now CENVAT) credit of duty paid on the inputs purchased from any dealer w.e.f. 04.07.94. The dealer intending to issue modvatable (now Cenvatable) invoices should get themselves registered with the jurisdictional Range Superintendent by following the procedure prescribed in Rule 9 of Central Excise (No.2) Rules,2001. A Separate registration should be obtained for every godown/store-room of the dealer. The dealers who get themselves registered with Central Excise will ensure that the prescribed register is maintained in the godown/store-room. The Dealer is required make proper entry of each consignment received/issued by them in the prescribed register (see details in Central Excise Rules and Manual).

The Dealer shall issue the invoices made out in quarduplicate. The copies of the invoices issued by a first stage dealer and a second stage dealer shall be marked at the top as "FIRST STAGE DEALER" and "SECOND STAGE DEALER" respectively. The invoice issued by a first stage or second stage dealer in the case of imported goods and by a second stage dealer in the case of other goods, shall be duly authenticated by the proper officer.

The Dealer shall issue only one invoice in respect of the consignment if all the packages comprising the said consignment are dispatched in one lot at any one time. If a consignment is split up into two or more lots and each such consignment is dispatched separately either on the same day or on different days, a separate invoice shall be made out in respect of each lot. Separate invoices shall be issued in case where the consignment is loaded on more than one vehicle.

The Dealers are required to submit to the Range Superintendent, a monthly return and other documents for verification.

nandakumar (Project Manager) (21 Points)
Replied 02 February 2011

Our Unit is engaging in Processing granites and Marbles.Ours is manufacturing unit and producing non excisable goods. Shall we do trading in manufacturing unit? ie purchase of finished granite/marble slabs and sold to others.

Please advise.

Thanking you

Nandakumar.R